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High bank fees again criticised by parliamentary C'tee

Government Member of Parliament Fitz Jackson Government Member of Parliament Fitz Jackson
KINGSTON, January 22, 2015 - The nation’s banks have once again come in for severe criticism from the Economy and Production Committee of the House of Parliament, which yesterday denounced high banking transaction costs and, in particular, fees on deposits being charged by bankers.

Committee member Fitz Jackson expressed concern over what he said was "a most grave issue" of fees being charged on customers' deposits.

"You are licenced by the Bank of Jamaica to get into the business of taking people's money as deposits, and you use that money in the business of lending and earning -- there is no argument about that -- the concern is when you have been granted that privilege, you now impose a charge on them, called fees, for transaction on their own money," he said.

Jackson suggested that there should be some minimum package of services due to depositors, free of fees, "in return for the privilege to hold their money and to do business with it to earn".

"It is your business now to find out how efficiently you can get the benefit of the deposit, and make more money. A banking licence is not a right, it is a privilege extended to you by the state," he asserted.

The committee received presentations from the island’s major banks including Scotiabank, First Caribbean International Bank (FCIB) and Sagicor Bank, and emphasised that it took no issue with the profits these institutions were making, but said it was concerned with the burden placed on the consumers as a result of the high fees.

Committee member Mikhail Phillips lamented that "When you look at the overall cost of operating and the overall cost to the customer... what I've seen, especially for the two big banks, they are less concerned about providing more of that cheaper channel because they are the big two."

"When you look at the fees -- the ABM fees, the e-banking fees, those are the highest amounts -- and what you have are the big two [banks] driving the market. I hope that the smaller banks somehow catch up and provide a cheaper way for customers," Phillips said.

He argued that given the number of out-of-branch avenues created to prevent customers having to visit banks for in-branch transactions, which carry the highest costs, the savings to customers should be more evident.

Of the three banks represented in Parliament yesterday, the FCIB representative said that it is the only institution that does not charge for deposits to personal accounts, and also allows 10 free withdrawals per month on salary accounts.

The committee will hold its next meeting on February 3, when it proposes to continue discussions on the Bank of Jamaica (BoJ) report on the fee income of commercial banks. According to the BoJ interim report, there was a 30.8 per cent increase in the fee income of commercial banks since 2010.

The report was commissioned after Jackson, in 2013, called for bank fees to be fully investigated, and for the BoJ to submit a report to the committee on the charges up to October 31, 2013.