by Shawn Cumberbatch
A Fair Trading Commission investigation into the way local commercial banks provide services ranging from credit cards to mortgages has uncovered some contract breaches.
But a separate FTC probe, which found that at least one charge instituted by the banking sector did not reflect the cost of providing the service, the regulatory body found no evidence of a bank conspiracy to dupe consumers.
This afternoon, in an immediate response to the news, President of the Barbados Bankers Association, Horace Cobham, told Barbados TODAY three of the five commercial banks now operating in Barbados had amended the sections of their contracts which did not comply with the Consumer Protection Act, and noted the remaining two would complete the task by next month.
Additionally, the RBC Royal Bank executive said he hoped allegations of collusion among banks in setting their charges would be put to rest now that the FTC had found no evidence of such.
Today the FTC released the findings of separate investigations on “Standard Form Contracts Used by Commercial Banks and Local Bank Charges” within the provisions of the Consumer Protection Act.
The organisation noted that after assessing the fairness of 1,291 “contract terms used in contracts” by commercial banks, it had found 56 breaches.
“The commission has been working with the banks to ensure that these unfair contract terms are amended or deleted. To date, three of the five banks have already made changes to comply with the Consumer Protection Act. The commission will continue to work with those banks which have not yet complied to ensure full compliance,” it said.
As for the bank charges, the FTC said its investigation covering the movement of fees and charges between 2006 and last year “did not find evidence of collusion”, but it pointed to “several issues of concern that bear relevance to achieving effective competition within the market”.
“While customers are aware of the charges, it appears that they are unaware of the rationale for the charges and are generally not empowered, due to lack of information or lack of clarity of the available information, to make comparisons between the various institutions,” the report said.
Reacting to the FTC disclosures, Cobham said the FTC recommendations on contract changes were “wholeheartedly accepted” and there was “no push back or negotiation or anything of that nature, I think the banks accepted the positions and then set about making the changes”.
He explained part of the difficulty was that the banks would have had contracts in place for “many years”, and prior to existence of the Consumer Protection Act.
“Of course when you constitute a Consumer Protection Act and you have your own specific in a particular country now it is about the conformity of your forms to that act and in their investigation was essentially to do just that, that is to review each contract within the context of the new act and determine if they conformed or if they didn’t conform,” he noted.
“I know all the banks wholeheartedly accepted all the recommendations that they made in terms of changes to the forms and I believe at the time of giving their report on their findings three of banks had completed all of the changes and there were two others that were in the process of completing those changes,” he said.
Regarding bank charges, the association head said having heard over the years that banks “get together and set rates and charges” he was pleased there was no evidence of collusion.
“At the end of the day I don’t want clients to feel that we are an industry that somehow could collude against consumers because that’s not true at all,” Cobham stated. email@example.com