A new bill now before senators to amend the law governing financial institutions would curb “arbitrary” charges by the nation’s banks and help put the brakes on some rising bank fees, a minister said Wednesday.
Prime Minister’s Office minister Senator Shantal Munro-Knight stressed that the Financial Institutions (Amendment) Bill was not intended for the Central Bank to set fees but to intervene when fees seem to increase while deposit interest rates remain meagre.
As Senator Munro-Knight introduced the legislative change to the chamber, she noted that it would mandate the banks to provide adequate notice of changes and to provide explanations and justification for any increases to their charges.
She noted recent nationwide concern that banking fees have been consistently rising, leading to the notion that customers are paying banks to hold their money at a time of excess liquidity of around $10 and $11 billion. This state of liquidity has continued even while the world was going through the COVID-19 pandemic, she added. She pointed to the 2021 Financial Stability Report which suggested that the banks’ liquidity status allowed them to be in a position to offer moratoria on loans and still maintain their day-to-day functions.
“The report went on to say: ‘This is a combination of increased deposits and a recent decline in loans being issued. Barbadians been saving and not borrowing as much,’” she quoted from the report. The next year’s report, she added, spoke to the improved profitability of banks.
“It would appear on the surface of it, that along with making money from the lending portfolios that they have, commercial banks are also seeking to ensure that they can make the most of the passive income as well from transactions,” said the senator.
“This is not the first time that we have had the concern around the fees that are set by commercial banking sector…In 2020 the former governor of the Central Bank Cleviston Haynes had cause to make the comment that if we were not careful we could see a threat to what he termed financial inclusion.”
The minister added that Haynes’s warning then was that this country should guard against some people being denied a stake in financial services which could happen if they could no longer maintain their accounts.
Senator Munro-Knight told the chamber that this issue of financial inclusion is a worldwide concern and it is important for Central Banks and other regulatory agents to be able to guard against such an event by being able to issue directives to manage the situation to protect the financial inclusion of consumers.
She recalled that the Central Bank has had to intervene similarly in the past to cap certain charges, to require that banks maintain at least one account that is free from banking fees and to put a stop to charging customers to electronically transfer money from their accounts to other financial institutions.
(SP)
