I hope that each and every one of you enjoyed the holidays filled with Christmas cheer. Now we are marching swiftly on to January of another year, a time when our mind is on our money and our money on our mind (a bastardised quote from some rap song, the name of which I cannot remember).
My brain is still foggy from all the holiday cheer and Boxing Day is really not a time when one wishes to contemplate or engage in serious legal argument. However, an article about a Fair Trading Commission investigation uncovering several “unfair terms” in loan and other contracts that commercial banks have been presenting to their customers … relating to standard form contracts used by commercial banks and … local banking fees and charges, caught my attention. These findings may have been a “revelation” to the FTC but not I suspect to the average consumer of financial products or even a below average lawyer.
Part II of the Consumer Protection Act Cap. 326D sets out the law as it relates to unfair contract terms. Generally speaking, suspicion first arises where the term is not negotiated with the particular consumer and even if it is negotiated an assessment may show that it still forms part of a “pre-formulated standard contract”.
Section 5 puts the burden on the supplier of the services to show that the contract term was individually negotiated. The stage having been set, what precisely constitutes an unfair contract term? Section 8 of the act states that “A contract term is unfair if, to the detriment of the consumer, it causes a significant imbalance in the rights of the supplier and the consumer”.
The Schedule to the act sets out specific terms which are to be considered unfair if they have not been individually negotiated.
For example, discretionary power of the supplier to dissolve the contract where the same right is not granted to the consumer; retention of large sums where the supplier dissolves the contract and the contractual services have not been supplied; imposition of disproportionate penalties; enabling the supplier to unilaterally alter the nature and terms of the contract; automatically extending the period of a fixed term contract where the consumer has to give too early notice of intention not to extend all run afoul of the legislative provisions.
There are 17 terms set out in the schedule and on my perusal, commercial banks have habitually run afoul of 14 of them. Of the remainder, only one of those clauses is applicable to a banker/client relationship.
It is of note that neither the FTC by way of public announcement nor the writer of the article took the time to provide examples to the unwary public of the types of breaches which have been found. Empowering and educating the consumer are clearly never priorities.
Further and in keeping with the Central Bank’s laughable “moral suasion”, the FTC is quoted as “working with” the banks to ensure that the terms were “amended or deleted”. Anyone who has ever turned on a computer would know that removing these clauses requires a simple highlighting of the offending text and clicking of a delete button. It really does not take that long and a child could do it.
The banks have lawyers and amending the clauses requires a simple change of language which is what lawyers do and are paid for doing. Even more laughable was the suggestion that the banking sector is competitive and that the crippling fees are as a result of consumer choice. The banks in Barbados operate like a cartel and customers in Barbados behave as if the banks are doing them a favour.
December is the season of Christmas loans to buy consumer goods and January is the month of repentance and loans for debt consolidation. Read carefully before you sign and be reminded that banks, like any other commercial enterprise, are in the business of making profits and are not simply doing you a favour. The Consumer Protection Act is available online at http://www.sice.oas.org/compol/natleg/Barbados. Empower yourself.
May your 2013 be bright, blessed and prosperous!