Minister of Industry, Investment and Commerce, Hon. Anthony Hylton, has endorsed several key elements of the draft banking code, and has invited all stakeholders to work together to develop a progressive code, which embodies international best practices and is acceptable to the banking sector and consumers alike.
Addressing a consultation on the draft banking code at the Courtleigh Hotel in Kingston, on January 19, the Minister reflected on the 2010 Consumer Affairs Commission (CAC) survey of bank charges, which revealed significant differences in fees charged by commercial banks of over 100 per cent.
He observed that the findings provided the “catalyst for the development of the proposed banking code."
The development of the code is part of the ‘Promotion of Consumer Protection in the Caribbean’ project, funded by the Inter-American Development Bank (IDB), which involves Jamaica, Barbados and Trinidad and Tobago. The draft document is now the subject of consultations among the various interest groups, including the Bank of Jamaica, financial institutions and consumer organisations.
The Bank of Jamaica, which is in the process of developing an “enforceable” code of conduct for deposit-taking financial institutions, has submitted comments to the CAC on the draft ‘voluntary’ code.
Executive Director of the CAC, Dolsie Allen, explained that the CAC/Consumer International led project would result in the ‘voluntary code’, while the Central Bank would develop an enforceable code that would likely attract sanctions for breaches.
Meanwhile, commercial banks and other financial institutions, while indicating that as a fraternity they are considering developing their own code of conduct, are now displaying interest in the review of the draft voluntary code, and many individual banks were represented at the latest consultation.
Regional Project Co-ordinator, Consumer International, Candice Ramessar, emphasised that the draft code is not an attempt to coerce the banking sector, but rather to encourage them to adopt practices and principles, which are in the best interest of the banks as well as their customers.
The draft code contains 11 key commitments, which include: non-discriminatory access, service standards, product information, credit information, variation in fees and charges, provisions for elderly, disabled and pregnant consumers; and dispute resolution.
Among the key commitments of the draft code is a requirement that all consumers should have equal right of access to service provided by the banking institution, as long as the customer meets the entity’s requirements of access to the service being requested.
It also states that the banks should display service standards at their branches and on their websites, as well as make copies available on request. In addition, the characteristics of all products should be clearly explained to the consumers, including all related charges that exist or may be implemented.
Terms and conditions of contracts should be fair and should set out both parties’ rights and responsibilities in plain and simple language, while legal and technical terms should only be used if necessary. The customer must be provided with a copy of the terms and conditions, and the contract.
Importantly, the draft code stipulates that there must be a cooling off period of 72 hours for all contracts without any disputed penalties, charges or interests being applied to the customer. This period should commence from the time of the customer’s signature, and weekends and holidays should not be included in that 72-hour period.
The code also states that banks will provide notification of changes in fees and charges at least 60 days before they are to take effect. Automated Teller Machines (ATM) are to display all fees associated with each transaction prior to the completion of the transactions, and customers should be given the option of discontinuing the transaction if they do not wish to incur these costs.
Following further consultations, the code is expected to be finalised by June 2012 when the project will come to an end.
By Allan Brooks, JIS Senior Reporter