Fitz Jackson Still Fighting For The Banking Services Amendment Bill

MP Fitz Jackson

Today, Bark Di Trute brings to you MP Fitz Jackson's proposal for amending the Banking Services Act. Please read this carefully and add your comments at the bottom of the blog. It is time for the people to get involved.

The bill is not about regulating banking fees; rather, it is about ensuring a minimum level of service required of licensees of the state through the Bank of Jamaica (BOJ). The bill does NOT address any of the fees being charged by banks for the various services they provide in the transaction of the various banking services involving the use of the banks' own funds. On the contrary, the Bill ONLY refers to transactions by account holders on their accounts and their funds in their accounts.  

Banks, by way of a licence is given the privilege of taking deposits. 

• Banking, unlike every other business enterprise, is very different. It is the depositors’ funds that are the foundation of banking operations. Without deposits, no banking can occur.  
• Banking is most peculiar because the depositors’ accounts represent the results of their sweat, sacrifice, luck, or even a gift.  
• Funds placed in deposit accounts are not placed there for investments but for safekeeping.
• One’s property and liberty are their most treasured possession. This is the reason why every state from time immemorial has a police force and judicial system, to ensure the protection of each person’s property and his or her liberty!  

It is therefore an imperative of our Parliament, the highest court of the land, to ensure the requisite protection of the people’s property, among other reasons. It seeks to preserve the basic expectation of every Jamaican and others that your funds placed in a licensed institution of your country will be safe. The amount you put in will be there until whenever they go back for it. We owe that to anyone, regardless of who you are or wherever you are in Jamaica or, for that matter, in the world.  

 

 

MINIMUM SERVICE PACKAGE 

 

As I mentioned earlier, the bill before Parliament is essentially about providing a minimum service package that seeks to protect depositors’ funds in the bank and in their transactions with the bank against depositors’ accounts. How does one seek to rationalize that depositors should be contented with providing their money, from which the banks can conduct business and make a profit, should be penalized for making any transaction on their own funds, not the bank's funds? The sophisticated name for those penalties is FEES! 

The philosophical base of the MSP is:

to the extent that a licenced financial institution is authorized to take deposits, there should be a minimum level of services provided, which seeks to ensure the face value of their deposits or transactions with the institutions is not reduced.  Plain and simple!    

We must be mindful that the bank, like all other business operation have to incur unavoidable costs, such as personnel and other utilities, advertising, public relations, marketing, rent/mortgage, taxes, etc. all these are in order to carry out the business of banking in order to make a profit and meet those unavoidable expenses. Why is it that whatever costs are involved in the depositors' minimum services should be charged to the depositors? Taken to its logical conclusion, the depositors should be justified in paying the cost that the banks incur for paying their staff the salaries they are paid, the utility charges, the public relations costs, etc. On the other hand, is it that which they are already doing in charging the fees?

What are some of the provisions of the MSP? 

• Prohibiting dormancy fees on inactive accounts: in so doing ensuing that what is placed in an account is not penalized for any inactivity, as the banks do continue to have access to the funds in those inactive accounts for lending, meeting reserve requirements, and making profits from the account holders don’t participate. Earning interest on deposit accounts has virtually become a thing of the past.    
• Getting information on account balances and general records of transactions made on the depositors' accounts 
• Encashing cheques without any fees (penalties). Cheques under law are a legal instrument in making transactions against one’s account. It is an alternative to cash, which should be safer for both the account holder and the banks themselves.  The banks already do charge a fee against the account holder for writing the cheques as a processing fee. That is a contractual arrangement between with the bank from the point of opening the account, and maintaining such account.  (encashment fees for cheques distorts the face value of a transaction, making commerce unpredictable and irregular) 
• ATM platform to advise of the cost of the transaction before the transaction is completed so the customer can make a decision before, on whether they wish to incur the cost, or use any alternatives they may wish. 
• Required to inform and obtain the customer’s approval of any change in the conditions of the account prior to coming into effect. o Prohibit any fee for time of day or day of the week transaction while the bank is open for business. (such as Saturday fee - JN)      

The practice of incrementally imposing fees on account transactions have arbitrarily violated the fundamental practice of banking, to the disadvantage of the depositors and account holders. The sadness of this that the State has become complicit with the banks in placing the depositors/account holders in the disadvantageous position: 

 

The State has done so knowingly, or through negligence. What is most is most appalling about in this failure is the fact that the practice is in violation of the critical Duty of Care provision of the law! (see Section 36 (a) of BSA). 

 

Let us examine the Duty of Care provision, the fiduciary responsibility of the banks:  

a. The safety of depositors funds 

b. Ensuring confidence in the banking sector 

  

Both of the above are important to the depositors on the one hand, and the banks on the other, but the country on a whole.

• Viable and credible banks and a banking industry is imperative to a modern economy and society 
• The savings level determines the level of funds available to lend for national development and personal self-actualization in various endeavours. 
• Low savings levels in my opinion has the same effect as crowding out by government over-extended borrowing  from our banks (what are our economists and academics say about this?) 
• How is this stunting the prospects of economic growth by denying funding to the private and productive sector? 

(do the Growth Council) o Are there any studies being done by the PSOJ, CAPRI OR any other such groups? 

GOING FORWARD 

 

The tabling of the Private Members' Motion in November 2013 and the subsequent tabling of the Private Members' Bill now before Parliament, among other things, have made clear how the depositors and the country at large REALLY feel about our banks and banking services in Jamaica. To the extent that our banks truly see themselves as committed to long-term endeavours, and not hustling, there is now a great opportunity. 

Real businesspersons take decisions for the long-term benefits; hustlers just grab as much as they can get now! Have banks over time become mere hustlers? Just a question.   

If the banks are given the benefits o f the doubt, they should welcome the Bill as it allows them to reconfigure their banking model, to better respond and realign to the depositors' desires and expectations. This is what entrepreneurship is all about: designing and developing products and services to satisfy market demands. This may very well call for the banks to reinvent themselves. Indeed, this is where intellectual and creative abilities must be awakened, and come to like. Intellectual dexterity should differentiate itself from mental laziness and mediocrity in merely tacking on fees here and there to increase margins and profits. Like our intellectuals in the applied sciences, such as engineering, medicine, etc., a challenge does not mean the end of the road or a destination. Rather, it is a point at which you become truly creative, taking you beyond where you are. 

 

The banks, therefore, should see the bill as providing an opportunity for a rebirth and a platform from which to progress to new and lasting levels of real prosperity. A prosperity that works not just for a few, but for all Jamaicans.  

End

Click the link to see the proposed bill—A Bill To Amend The Bank Services Act.

Note

Fitz Jackson is the PNP member of parliament for St. Catherine Southern. He is the Opposition Spokesperson on Security.

Fitz Jackson has been critical of how banks treat their customers and has been a champion for pushing a bill that would make banks deal fairly with their customers.

Editor's Note

All consumers need to start asking questions and call for changes in the banking sector. We are being used and abused left, right and centre.

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