'Excessive fees outweigh service costs to banks'

The Government yesterday fired the latest salvo in the ongoing furore over user fees charged by commercial banks, releasing details of a report by the Fair Trading Commission (FTC), which show that revenues generated from these fees are "considerably greater" than the cost of providing the services.

A strident Karl Samuda, minister of industry, investment and commerce, said the report, which found nothing illegal, revealed that income from fees and commissions contribute between seven and 20 per cent of the net revenues for commercial banks.

Samuda said the report used audited financial statements from both the National Commercial Bank and Scotiabank Jamaica, two of the nation's largest financial institutions, which revealed that they have maintained a large share of the market, even though they have the highest fees and charges, on average.

Jab at commercial banks

He said these and other findings give a clear indication that commercial banks can lower their user fees and still be competitive.

"Simply put, fees are excessive in relation to expenses and charges. There is significant room (for them) to lower fees and still cover attendant expenses," Samuda told reporters during a press conference at his ministry in New Kingston yesterday.

Samuda's comments were a clear jab at the commercial banking sector, which has argued that lowering user fees could lead to redundancies.

"We don't buy that," the commerce minister said bluntly.

"These bank charges are unreasonable ... let me make that very clear. They (the banks) have a ferocious appetite for earning money through services," he added.

Minna Israel, president of the Jamaica Bankers' Association (JBA), told The Gleaner yesterday that she could not respond to the FTC report in detail because she had not seen it.

Price for automation

However, she explained that most banks are moving to provide their customers with automated services, which require "a lot of money upfront".

In the end, she said, this would result in long-term savings to customers.

"As you automate and as you now understand the cost of the service you provide, you can then price it accordingly," said Israel, adding that public education would be one of the JBA's main focuses this year.

Samuda made it clear, however, that his administration was no longer going to simply talk about "excessive" bank charges.

"We are going to be analysing their operation ... we are going to be literally in their backs like ticks to make sure the interest of the consumers and the financing community of this country is aware of what is happening," he vowed.

"There will be no hiding place for anyone involved in any activity that does not give the consumers of this country a fair shot," Samuda said.

The minister said his Government was not intimidated by commercial banks and would be unrelenting in its bid to protect consumers.