Bankers reject consumer input, push their own code

Marcella Scarlett, Business Reporter

Jamaica's bankers have drafted their own code of conduct as a self-policing tool that they say was passed to the central bank for review late last year after a public pushback on expensive transaction fees hit crescendo with the intervention of Government to force new banker-client practices.

The Jamaica Bankers Association (JBA) is offering no details on what the draft code entails, but president Bruce Bowen said more information would be forthcoming once the Bank of Jamaica (BOJ) gives its feedback under a timeline he defined as "shortly".

The initial deadline for finalising the JBA code was March 2011, but no reason was given for the delay.

The banks have been reluctant to make concessions on fees, which represent billions in revenue annually - the top two banks grossed a combined J$12.6 billion in fees and commissions in 2010.

The bankers argue that the fees are important as offsets to high operating costs and the JBA have taken the position first articulated publicly by former president and country head of RBC Royal Bank, Minna Israel, that the issue could be resolved through better education of account holders and clients.

Bowen, the president of Scotia Group Jamaica, is maintaining that argument.

"Jamaica's commercial banks have always believed in the right of consumers to make informed decisions regarding banking services, and have endeavoured to provide customers with advance notice of changes to terms and conditions for services," he told the Financial Gleaner.

"From as far back as last year, the JBA undertook to explore ways to ensure that our customers are informed of their choices and duly advised in the event that there is a change in the fees, terms and conditions of services."

A press advertisement last month that first alerted the public to the JBA draft code said it would "monitor both the timing and frequency in which banks can introduce fee changes." There was no reference to the other chief concern - the cost of the fees.

Voluntary participation

JBA members, comprising seven commercial banks and two merchant banks, will not be bound to sign onto the code; their participation will be voluntary.

The bankers' move to draft their own code appears to signal a rejection of the blueprint as proposed by the Government in September 2010.

That code, drafted by the Consumer Affairs Commission (CAC), National Consumers League and Consumers International, too would have rested on voluntary participation, but it also laid out a template of penalties for signatories who breach the rules.

Bowen said JBA has suggested that the state agency also place its draft before the BOJ so that their two efforts are not duplicated in the final code, suggesting that he expects an eventual merger of the ideas.

"We understand that the Bank of Jamaica will be providing us with their feedback shortly and are confident that in the end a code will be agreed that reflects the input of all parties," Bowen said.

Still, a CAC consultant has denied that such a proposal was made; and the BOJ is yet to confirm its review of the JBA draft code.

The CAC also disclosed that JBA has formally rejected its proposals in writing.

Rejection

"... We made several overtures to the JBA to work with them on developing a code of conduct that would represent fairly the interests of the consumer and also the JBA. This was rejected at the time," said Candice Rammesar, the Caribbean project coordinator at CAC.

This "rejection" came in the form of a letter dated May 12, 2011 penned by Minna Israel, former president of the JBA, in response to a letter dated April 27, 2011 from the CAC.

Israel's letter said the bankers wanted to "avoid potential confusion" in the minds of customers and the public.

"Our code is derived from international best practices and modelled on the code of conducts that exist in Canada. It should be noted that the Canadian voluntary Code of Conducts are recognised by the Bank of Nova Scotia and Royal Bank of Canada in Canada. We are confused by their reluctance to do so in Jamaica when they do so readily in Canada," said Ramessar.

The CAC said that two appointments were made with the BOJ to discuss the matter, then postponed; the latest on July 26 when the consumer advocates said they were advised that the governor would be on vacation.

The CAC draft code has 11 provisions, including: access to branches, simplified language, notice periods for fee increases and rate changes; three-day cooling off period between loan contract signing and execution without penalty; disclosure of internal credit scores; among others.

marcella.scarlett@gleanerjm.com