Marcella Scarlett, Business Reporter
The Bank of Jamaica has released a draft proposal of an 'enforceable' code of conduct for banks and other deposit-taking financial institutions, but the local consumer watchdog says it is pushing ahead with its own guidelines announced two years ago.
Both the Jamaica Bankers Association and the Consumer Affairs Commission (CAC) have drafted their own codes - which they are still to finalise - but those codes are based on voluntary compliance.
The BOJ's code is not.
The outlines of the draft code is contained within a consultative paper issued by the central bank, which means interest groups will have more chances to influence the final provisions.
"A voluntary code is different from an enforceable code. We are moving from the big-stick regulations and moving more to a system where businesses want to distinguish themselves with good customer service," said Dolsie Allen, CEO of the CAC, explaining why the voluntary codes will not be shelved.
Allen said it is not unusual for banks elsewhere to sign on to more than one code.
She notes that the BOJ's document - titled 'Proposals for Enhancement of the Legislative Framework for the Deposit Taking Sector' - states that its code will not preclude or replace other codes.
"Nor will it preclude the establishment of a specialised statutory body (e.g. financial services' consumer-protection agency) to deal with the full range of financial services and consumer-protection issues in the event a determination is made that such a policy action is warranted."
The enforceable code is item No 26 on 'Customer Issues' of 28 items covered. The document's 'omnibus' provisions - which will eventually be legislated — speak comprehensively to all aspects of bank operations, including licensing, disclosure requirements, corporate and group restructurings, mergers/amalgamations, acquisitions, secrecy and information sharing.
The consumer lobby said the CAC is in the process of reviewing its code, which it hopes to finalise shortly.
The timetable, it said, depends on the conclusion of discussions with the JBA.
The JBA also told Sunday Business that it has no plans to shelve its code, but offered no other comment, saying it would need time to study the BOJ's document.
The move to impose standards on the banking sector resulted from consumer pushback against the large banking fees imposed on bank clients, as well as the cost of loans, which has been blamed for stifling the credit market.
Fees have become a multibillion-dollar business for the banks, with National Commercial Bank (NCB) and Scotiabank Jamaica being the biggest beneficiaries in a sector of seven commercial banks, two merchant banks, and four building societies.
NCB made J$7.11 billion from fees and commissions in 2012; Scotiabank made J$5.25 billion.
"Right now, we are having discussions with the Jamaica Bankers Association. We have looked at their code and compared it to ours, and there are some areas that we did not initially agree on that we are discussing. Certainly, there will be some amendment to our existing code once the discussions are through and we have signed off on the changes," said Allen.
She said that the CAC code will not compete with the BOJ's enforceable code; rather it will enhance it as there are some areas that the BOJ code mentions "sparingly" or did not mention any at all.
These areas, she said, will be fleshed out in the CAC code, such as service standards, non-discrimination, dealing with the disabled, pregnant and other vulnerable customers, and a cooling-off period.
"If the banks want to come up with international best practices, they have to have standards. They have to show that they value their customers; so adhering to a voluntary code augurs well for the banks, because it will distinguish their services," she said.
"Sometimes customers are not assertive enough and they might not even be aware of their right. If we can prompt, then they would know what standards to expect, what quality of service they are to look for. Even if the banks don't sign on to our code, at least the information will be out there," she said.
Of particular importance to the CAC was the omission of provisions surrounding fees at the ATM.
"We are advocating for fees to be displayed to the customers so that they can have the option to choose whether or not they want to continue. We are disappointed that the BOJ did not make mention of this," said Allen.
"We know we cannot include every single issue, but we would like to see at least some minimum standards set out in the legislation," she said.
The BOJ will be accepting comments on the consultative paper up to March 4, 2013.
Allen said the CAC would be among those offering feedback, "whether or not we are approached".
Some proposed mandates for DTIs: