Gov’t Making It Easier for Jamaicans to Access Financial Services

Navigating the financial system can be intimidating for the average person.

Terms such as stock options, dividends, reducing balance are not simple or easy to understand and can be a turn-off for persons looking to access financial products to serve their needs.

In addition, there have been complaints among the unbanked about the onerous procedures they have to go through to open, operate and maintain bank accounts, which  pose a barrier to entry for many people.

In 2017, the Government developed the National Financial Inclusion Strategy (NFIS), which articulates the Administration’s drive to create an enabling environment that makes it easier for Jamaicans to save, invest and do business.

The goal of the NFIS is to create the conditions under which Jamaicans, particularly those deemed underserved by the domestic financial system, can confidently save and build up resilience against financial shocks, and firms are able to invest, grow and generate greater levels of wealth.

A key part of the strategy is improving the financial literacy of Jamaicans through public education, so that they can better understand the basics of personal finance and make informed decisions about what to do with their money.

National Financial Inclusion Coordinator at the Bank of Jamaica (where the NFIS Secretariat is housed) Melanie Williams, said that significant gains have been made since the strategy was launched in 2017.

These include recent amendments to the Proceeds of Crime Act (POCA) and regulations, to make it easier for persons to open bank accounts.

Ms. Williams, who was speaking at a Financial Services Commission Financial Forum recently, explained that the amendments “allow for simplified customer due-diligence requirements, or  simplified know your customer (KYC) requirements to be applied to certain categories of consumers based on the assessment of a financial institution”.

“You know how difficult and how painful it can be to open an account. Many of us have often commented that it’s almost as if you need a recommendation from God Himself to do so. But I’m here to tell you that’s not the case.

“If you are, in fact, low risk for money laundering, or financing of terrorism, and the financial institution makes that assessment, and the type of service that you seek to acquire features certain design factors that further reduce that risk, you may be eligible to use simplified KYC requirements,” Ms. Williams said.

The simplified due-diligence procedures published in the Jamaica Gazette include, among other things, the requirement for only one form of government-issued identification from the applicant for the business concerned, or accepting forms of identification other than government-issued identification; accepting identification verification from third parties who are under analogous obligations with respect to customer identification and transaction-verification procedures as concerns the prevention of money laundering; collecting only basic identification information, such as names, addresses and dates of birth or, in the case corporate bodies, dates and places of incorporation.

Ms. Williams pointed out that while the decision to allow an individual to open and operate a bank account rests with the financial institution,  the amendments mean that “you will require less in terms of actually meeting the identification requirements to open the account. That’s a major achievement and one which we anticipate will benefit many of our low-income population”.

In addition to the legislative measures, Ms. Williams said that the efforts of the NFIS have seen more sources of funding and provision of technical assistance for micro, small and medium-sized enterprises.

She noted that the Ministry of Industry, Investment and Commerce, as well as the Development Bank of Jamaica, has provided a range of products and services in this regard.

She said that the Industry Ministry must also be commended for improving the regime that allows for business persons to use movable collateral such as equipment, computers and cars as a basis of obtaining a loan from a regulated financial institution.

“I’m pleased to let you know that Bank of Jamaica continues to work on improving digital payments for you, the consumer, so that these are accessible and at the appropriate price point for you, which we all can look forward to,” Ms. Williams added.

She noted that although the BOJ is pleased with the achievements of the NFIS to date, there is still more to be accomplished over the next few years.

Key among its plans is improving the financial literacy of all Jamaicans, which should empower them to make wise financial decisions.

“Our timeline that we are working towards is 2024 and we are working towards improving the levels of financial literacy in our Jamaican population, so that you have a better understanding of key financial concepts.

“Consumers need to understand the products that are being presented to them. They have to be in simple, straightforward language, free from technical jargon that can cause confusion,” Ms. Williams noted.

“We are also working towards having a proper consumer protection regime for that part of the market that is not yet regulated… from a consumer protection perspective. And by that, I mean, commercial and merchant banks and building societies as well as all other entities that are regulated by the Bank of Jamaica.

“Consumers need to be comforted that there’s a regulator in the space that will protect them if they do have a dispute with the financial institution, and that they will have an easy, quick process to resolving any issues or concerns that they may have.” Ms. Williams added.