Bank fees hikeFriday, January 21, 2022
THE island's two largest commercial banks have announced new and increased fees that will take effect between January and March 2022, including automated teller machines (ATMs) charges and other fees, drawing the ire of St Catherine Southern Member of Parliament Fitz Jackson.
Since the start of 2022, NCB has introduced a charge to customers withdrawing from its automated banking machines. Before, NCB customers could do withdrawals at proprietary banking machines for free. Now they will be charged $30.95 for every withdrawal.
Account checks via the company's proprietary ATM network will remain free; however, using non-NCB ATMs (Multilink) for withdrawals will cost the bank's customers $60. Balance enquiries will cost $25 each after the first four for the month. Using international ATMs for withdrawal via the bank's Visa debit card will attract a fee of $500.00 per transaction.
The company has also published online a plethora of other new fees which took effect on January 3, 2021. Included is the charge to secure and print an account statement in the branch, which now costs $500. The cost is the same for an e-mailed statement. If a customer comes in to make a balance enquiry, or does so by telephone or e-mail, the charge is $296.14 per account.
At Scotiabank, effective February 1, the charge for ATM withdrawals at its proprietary machines is $25 per transaction and $60 for withdrawals at other banks' ATMs. Rates are less for seniors at $31 per withdrawal. Withdrawals at international ATMs will attract a fee of $312.
Other charges for Scotiabank will take effect on March 1, 2022. These include cash advance fees, loan application processing fees, refinancing fees, mortgage application fees, and more.
Other new charges set for March include late payment fees of 5.628 per cent +GCT, minimum $1,590 (including GCT 6.471 per cent minimum $1,828.50); and charges for guarantee issued to other FIs (local) $6,434.79 +GCT (including GCT $7,400) per letter for cash secured.
The NCB Financial Group, in response to Jamaica Observer queries about the fees, said, “The general review of fees was conducted in the normal course of operations and the changes notified to customers as required. We have reinstated fees that had been temporarily suspended when the pandemic started in early 2020 and we made adjustments to others due to increased costs, including inflation. We also eliminated some charges, such as the fees for balance enquiry and declined transactions. In conducting the review, we also made sure customers still have the ability to avoid fees on the digital channels, and we continue to provide certain fee waivers for our Gold Club (senior citizens) and Quick Save account holders.”
Scotiabank for its part, responding through its president and CEO Audrey Tugwell Henry, confirmed fees will change on February 1 for its customers.
“The current fees have largely been in place unchanged since 2019 and a review has become necessary due to the increasing costs of our operations. The average increase is approximately six per cent and fees remain in line with the market. The bank has been actively educating customers about the convenience and efficiency of utilising electronic channels, which attract low or no fees. All personal banking transactions on our online and mobile banking platforms remain free and use of these channels allow customers to conduct many day-to-day banking transactions, 24 hours per day, at their convenience,” Tugwell Henry stated.
Still, the banks' actions has left Jackson seething.
“They have been the main culprits quite frankly. Smaller banks follow behind them and they have said to me — the smaller banks — if the big ones are benefitting, why not them,” Jackson told the Caribbean Business Report.
He railed against the fees as being counterproductive for account holders and small businesses.
Jackson, who has tabled a private members motion in Parliament aimed at controlling the banks ability to implement fees, blamed the Government, who used its majority in 2018 to defeat his proposed amendments to the Banking Services Act.
“The Government has allowed the banks to penalise depositors for having monies in the bank,” he stated.
“As you see from Bank of America, there is a global push against these fees. More and more people across the world are recognising the unreasonableness of these charges by banks and the pressure being put on them have caused even big banks, like the Bank of America to, in some instances, terminate some charges and substantially reduce some,” Jackson pointed out.
Bank of America — a US bank — earlier this month said it is slashing the fees it charges customers who overdraw their checking accounts and plans to eliminate non-sufficient funds fees entirely. Critics in the US have pressured banks for fees which they say unfairly target vulnerable communities. Bank of America plans to end non-sufficient funds fees in February, and reduce overdraft charges by US$25 in May to US$10. The change will lead to a 97 per cent reduction in overdraft revenues from where they were in 2009, according to Bank of America.
For Jackson, instead of acting to achieve similar results for Jamaican consumers, “our Government just sit by and leave the customers to the mercy of the banks” with the fees charged to consumers. He said fees deducted from customers accounts retard their spending ability, further arguing that “at no point should you be worse off when you have a deposit in the bank”.
His proposal to deal with the issue is for customers to have a minimum of 120 transactions each year before they are charged. While that works out at an average of 10 free transactions per month, Jackson said the target is yearly, so that if a customer doesn't do 10 transactions per month, they would not lose any of the minimum 120 free transactions per year.
The MP charged that the Bill before Parliament has nothing to do with transactions such as mortgages, straight loans, overdraft facilities. “The fees charged for those kinds of transactions is a contractual arrangement and will not be part of the minimum transactions per year,” he said.
But having faced defeat on his proposed amendments to the Banking Services Act, Jackson has returned to Parliament, tabling questions to the finance minister to get action on at least two areas of contention with banking services.
“Subsequent to the Government using its majority in Parliament to block the Bill, I have examined one other violation which is the encashment charge covered under the Bill of Exchange Act and I raised that question with the governor of the Bank of Jamaica recently.”
He said he wants it to be made “explicit that banks are prohibited from charging a fee for the encashment of cheques drawn on the same bank.”
The other change he wants to see is making it easier for customers to change banks.
“What I am seeking to do is to say, if a customer is displeased with the service of a bank, don't cause them to be shackled to the bank because of the disincentive to provide the information necessary to open an account in another bank. The Bank of Jamaica requires all licensed deposit-taking institutions to have information on each depositor which satisfies the know your customer requirements...and all that needs to be done is for each bank that has that information, as required by the Bank of Jamaica, to be able to provide it on the request of the account holder to another bank, so they don't have to go through resubmitting the information, because it is already supplied to a license institution,” Jackson stated.
He said such a requirement would facilitate better customer service and greater competitiveness by the banks.
The Caribbean Policy Research Institute (CaPRI), in an earlier report on banking fees, said their research showed that fees charged by Jamaican banks are not generally significantly higher than those of banks in other parts of the world.
CaPRI used data on eight common fees charged by a sample of just under 400 banks from about 40 countries, with the fees from each country converted using the purchasing power parity (PPP) conversion factor. It also said that banks tend to compensate for reduced interest income by raising fees.
“It is clear that net interest income, and net fees and commissions for the general sample of banks, trended in opposite directions. When net interest income declined… net fees and commissions increased sharply, but when net interest income rebounded…net fees and commissions decreased sharply.”
NCB, a conglomerate with $1.9 trillion in assets at year end September 2021, reported annual profit in 2021 amounted to $20 billion. The amount represented a four-year low. At year end October 2021, Scotia Group Jamaica Limited posted $8.4 billion in annual profit, down six per cent year on year.
The Caribbean Business Report reached out to the Consumer Affairs Commission (CAC) for a sector update on commercial banking fees. Dolsie Allen, CEO, stated: “While the CAC was unable to do a banking fee review in 2021 it will be doing a full update in the second quarter 2022.”
She said most of her staff are out with COVID-19 at this time.