By NATARIO McKENZIE
Tribune Business Reporter
The Consumer Protection Commission’s (CPC) chairman yesterday queried whether new banking licenses were required to boost competition, after a majority of Bahamians blasted the industry’s fee-related practices.
Jerome Gomez expressed hope that the findings of the Commission’s newly-released consumer survey on commercial banking practices would stimulate discussion on whether further reforms and controls needed to be imposed on the sector.
He was speaking after the survey, which elicited just 598 responses, found that 83.3 per cent or more than four out of every five respondents felt there was no consumer protection for Bahamian banking customers.
When asked to rate their satisfaction with Bahamian commercial banks on a scale of one to 10, with 10 the highest, the majority of those surveyed - more than two-thirds or 70.1 per cent - gave ratings of five or below.
The survey found that many consumers feel Bahamian commercial banks are levying “too many” fees, and that these fees do not match the services offered. And only 172 persons or 28.8 per cent of respondents were aware of the Consumer Protection Commission’s existence before taking the survey.
Mr Gomez said: “We wish for the Government to look at the banking sector and determine whether there is time to introduce competition through the granting of new licenses.
“We hope that this survey will start some discussion about the banking practices, fees and customer service. We want banks to now look at their level of service that they give to the customers, and take as legitimate the complaints about fees and about service, and not simply do business as usual.”
The CPC, through its research unit, initiated and conducted the consumer banking survey between September and November 2016. It acknowledged that the total of 598 respondents was 402 short of the 1,000 goal, raising questions about the survey’s statistical significance.
Asked whether they felt that the fees/charges associated with their accounts were appropriate for the services received, 435 persons or 72.7 per cent said ‘no’.
With respect to the number of fees levied by commercial banks, 494 respondents or 82.6 per cent felt there were too many, with just 13 saying there were too few.
As to whether Bahamians were given sufficient advance notice of fee changes, 385 or 64 per cent said they never received warnings. Another 12.4 per cent or 74 said they “rarely” received warnings, while 93 or 15.6 per cent “sometimes” got them.
When it came to consumer redress, 379 persons or 63.4 per cent indicated that they have had a dispute or complaint with their bank. Of those, 167 persons or 27.9 per cent said their complaint was resolved in a timely manner, with 228 respondents or 38.1 per cent of the total indicating the reverse.
Some 232 respondents or 38.8 per cent said their complaint was resolved to their satisfaction,with 119 or 19.9 per cent answering in the negative.
As for whether Bahamians would recommend their bank to friends, family or associates, more than half - 310 or 51.8 per cent - said ‘no’, with 36.1 per cent or 216 saying they would.
“We are going to make the results of the survey available to the Ministers of Finance and Labour, the Central Bank and each of the commercial banks in the Bahamas,” Mr Gomez said.
“We would wish to get a public discussion going to determine if the banking/customer service process is broken and needs to be repaired.
“Is the banking fee structure running amok because banking fees are unregulated, and are banks trying to improve their balance sheets through fee increases as opposed to creating new and innovative banking products for their customers in an effort to improve income?”
Mr Gomez further questioned: “Are banks charging their Bahamian customers fees not allowed in their own country, and are Bahamian-owned banks adopting these fees simply to be competitive with the foreign-owned banks? Are banks concerned about customer service? Do they care that teller lines are long in most branches all day long?”
The survey results are unlikely to surprise many, given the negative attitudes many Bahamians hold towards the banks, which are easy targets for public ire in a low-growth, high unemployment environment.
Apart from the spate of new and increased fees levied in recent years, the banks have also been perceived as ‘villains’ over the numerous foreclosures and home sales they have enforced.
The Commission’s survey, though, challenges last year’s findings by the Central Bank of the Bahamas, which refused to counter rising bank fees with price controls, despite increases as high as 43 per cent on “a significant number of services”.
The regulator, unveiling its survey of commercial bank charges for the six months to end-June 2016, said direct intervention through mechanisms such as price controls would only create further distortions that negatively impact consumers.
The survey, reflecting previous comments by Central Bank governor, John Rolle, said improved consumer protection and financial literacy were the best safeguards to concerns over increased bank fees, and promised to “strengthen” these areas.
“An analysis of data compiled over the last six years showed that banks have raised fees on a significant number of the services charged and, in some cases, introduced new categories of fees on existing facilities,” the Central Bank said.
“However, there have been a few instances where fees have been adjusted downwards, particularly for those which are considered high volume services.
“While the current framework reflects structural factors impacting the domestic financial sector, the sector would benefit from initiatives on several important fronts.
“This includes strengthening practices and codes on financial literacy and consumer financial protection, which the Central Bank will pursue under its strategic focus on the sector. It is, however, believed that a direct response through price controls would introduce adverse distortions in the sector.”