Banks depleting dormant accounts
A parliamentary select committee on Tuesday demanded answers from the Bank of Jamaica (BOJ) about a raft of bank charges, including a $500 monthly fee for dormant accounts and charges for interim bank statements ranging from $1,800 to $2,200.
Karl Samuda, chairman of the Economy and Production Committee, was concerned about small savers whose accounts might become dormant for unspecified reasons and which are gradually depleted by monthly charges.
"Not only have they made money on your deposit, but they have eliminated your deposit with a fee. The objective of encouraging savings is denied," Samuda told his colleagues during a committee meeting examining a private member's motion on bank fees.
"Where does the philosophy of the bank come into play as far as those charges are concerned? And what inconvenience to the bank is that sum of money in the account, which they obviously use to make money?"
He asked BOJ executives what the central bank's role was, if any, in trying to educate the consumer about certain banking practices.
Committee member Fitz Jackson argued that some persons might consider the high fee of dormant accounts "serious consumer robbery because their money is being eroded every month".
He wanted to know if the central bank had ever exercised moral suasion in addressing this situation with the banks.
Gayon Hosin, deputy governor of the BOJ's Financial Institutions, Supervisory Division, said charges for dormant accounts are a phenomenon that applies internationally.
"Dormant accounts pose higher risks for banks as they are natural targets for attempted fraud (both internal and external). It requires the banks to exercise a greater level of due diligence in terms of transactions, and so the cost that is imposed is one that is intended to deal with the cost of that higher level of due diligence," Hosin told the committee.
Hosin had been invited to make a presentation on the BOJ interim report on fees and charges for deposit-taking institutions.
Samuda said members of the banking sector would be asked to respond to this issue when they appear before the committee.
The committee also took the banks to task for imposing fees ranging from $1,800 to $2,200 for interim statements.
"Any 14-year-old from Red Hills Road can go on a computer and flash out a fee within seconds, at any date."
Another committee member, Daryl Vaz, complained that in the absence of a regulatory framework for bank charges, consumers would "forever be at the mercy of the banks".