Central bank to talk with fincos over consumer issues
Published:Friday | January 26, 2024 | 12:12 AM
Bank of Jamaica (BOJ) Governor Richard Byles expects to finalise within a year the draft laws that will protect consumers from financial sector abuse.
At the end of the timeline, the draft will go to the nation’s politicians, who will debate it into law.
The BOJ will begin consultations with financial institutions in February to discuss consumer issues and, eventually, formulate standards, said Byles in his address on Thursday at the Jamaica Stock Exchange’s (JSE) Investments and Capital Markets Conference at The Jamaica Pegasus hotel in Kingston.
In recent times, consumers have complained about fees, lack of working ATMs, stolen funds in accounts, unauthorised rises in credit card available balances, and other issues.
“Either by next week or the week after,” Byles said about financial institution talks.
He added that the BOJ would also engage with members of the public, but no timeline was given for that.
It forms part of the restructuring of the financial regulators under what’s termed the ‘twin peaks’, which sees two entities control the regulation of the financial sector. The BOJ would take full control of the financial oversight of entities, and the Financial Services Commission (FSC) would oversee consumer and market protection.
Twin peaks first emerged internationally in the 1990s as a preferred model of regulation.
“We are at the consultation stage. Legislation always takes a long time. It is going to take us another year to get that law drafted and put on the floor of Parliament, then debate it. I do not know how long they will take, but in one year, it will go to Parliament,” said Byles.
Byles explained that the financial system is wide, complex and integrated.
Currently, the BOJ is only looking at one piece of the sector, and the FSC is looking at the other piece.
“Unless we collaborate more proactively, then we never really get a good view of everything,” he said. “What the twin peak is designed to do is make BOJ a specialist that knows everything about prudentials about every financial institution; and likewise, the FSC to know about consumer protection,” said Byles.
The issue of lack of consumer protection for the financial sector came to the fore last year with the scandal at financial institution Stocks & Securities Limited (SSL), surrounding the alleged defrauding of client accounts, including that of sprinter Usain Bolt, who publicly spoke on the matter.
It led the FSC to install an interim administrator firm at SSL. But on the regulatory side, the Government installed an interim executive director at the FSC and announced plans that will see the BOJ assuming the prudential, or financial, oversight of insurance and financial non-bank entities. These were activities hitherto done by the FSC.