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BOJ proposes 'enforceable' code for banking services

Published:Sunday | January 13, 2013 | 12:00 AM
Dolsie Allen, CEO of the Consumer Affairs Commission. - File

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.

"The enforceable code of conduct
will not operate as a replacement of, or substitution for, existing
substantive consumer-protection mechanisms, that is, fair trading laws
and regulatory body and the consumer protection laws and regulatory
body," the BOJ draft states.

"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."

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

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


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

NCB made J$7.11 billion from fees and
commissions in 2012; Scotiabank made J$5.25

"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.

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

"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

Of particular importance to the CAC was the
omission of provisions surrounding fees at the

"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

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


Some proposed mandates for DTIs:

  1. Obligations to notify customers of proposed variations in documentation terms and conditions;
  2. Use of fair clear language in contracts and communications with customers;
  3. Duty to implement customer complaint dispute resolution processes,
    including built-in timelines for addressing and responding to customer
  4. Duty to publish statistics on customer complaints at least annually;
  5. Duty to make generic competition information covering fees and charges
    for banking services available to consumers on a quarterly basis.