Consumer protection agency in the works for banking customers
The blueprint for a new consumer agency tasked with protecting banking and financial consumers is now being developed by a triad that includes the central bank.
But it is yet to be determined whether the new creation will operate as a stand-alone agency or as a unit of an existing outfit.
The Bank of Jamaica, the Financial Services Commission and the Consumer Affairs Commission have been tasked with its creation.
The plan for the agency was first disclosed last Wednesday. Bank of Jamaica Governor Brian Wynter during the launch of the National Financial Inclusion Strategy (NFIS), an initiative meant to open up banking services to the unbanked and underbanked and make it easier for Jamaicans to save, invest, do business, and access financial products and information.
Wynter said the Jamaican institutions were collaborating, with the assistance of the United States (US) Treasury Department, on the creation of market rules for how the banking sector handles consumer complaints and dispute resolution.
The US launched its own Consumer Financial Protection Bureau during the Obama administration.
NFIS Coordinator Melanie Williams said in response to Gleaner Business queries that the central bank has been tasked by Finance Minister Audley Shaw with developing the policy proposal for his consideration. But she said a decision has not yet been made on the operational structure.
She said the US Treasury Department is providing technical assistance to the Bank of Jamaica.
At the launch of the NFIS, Shaw said work has begun on a consumer protection framework, which will include dispute resolution, market conduct supervision, and mechanisms for handling complaints.
"With the assistance of colleagues in other jurisdictions, such as the United States, I anticipate that we will create a robust consumer protection regime for financial services," the finance minister said.
A key component of the NFIS, according to Wynter, was The Banking Services (Deposit Taking Institutions) (Code of Conduct on Consumer Related Matters), issued in August 2016. The code set the minimum standards for banking practices, and is expected to take full effect this August.
"This is an important first step in ensuring greater transparency in the disclosure of fees and key contractual terms," said the central bank governor.
But he also noted that while the banking code was an important development, more needed to be done to ensure consumer protection, which the national inclusion strategy was meant to provide.
At a press conference last year, the central bank governor said that while the NFIS was being designed, the Bank of Jamaica chose to pursue an enforceable code of conduct as the quickest way to have in place a common standard for how banking institutions treat their customer, and that it was committed to developing a strategy that goes beyond the limitations of a prudential regulatory regime.
"Instead of just leaving it to the market and to competition, modern times demand that effective regulation of financial services should take place in a manner that ensures that minimum standards in customer relationships are maintained," he said.