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Bank Payment Charges Need ‘Legitimate Redress’

THE Central Bank yesterday appeared to concede that fees for payment services were too high and “require legitimate redress”, a view shared by 78 per cent of Bahamians.

The regulator, unveiling its 2018 survey of ‘customer satisfaction’ with the commercial banking industry, said its “planned acceleration” of reforms to the Bahamas’ payments system - together with the increasing shift to electronic banking - would help “address these particular concerns”. However, it again expressed its preference for a solution based on increased competition, better information access and consumer education to resolve Bahamians’ complaints about the level of bank fees, with 49 per cent of survey respondents arguing these charges are “too high” and another 29 per cent finding them “somewhat high”.

Outlining the survey’s findings, the Central Bank said they also showed some Bahamians felt it was too difficult to switch commercial banking providers - something that could restrict sector competition and inhibit consumer choice.

“This survey provides a strong basis for interventions to improve consumer education around bank fee structures in the Bahamas,” the regulator concluded. “It also underscores the scope for more effective practices around notification of fee changes, and stronger mechanisms to allow consumers to compare fee across institutions.

“Scope also exists to reduce constraints, perceived or otherwise, on the ease of switching between financial institutions for products and services. Also, concerns around the level of fees concentrated most on payments and transactional facilities where average costs require legitimate redress.

“The planned acceleration of the Central Bank’s payments system modernisation initiative should begin to address these particular concerns.”

The survey, conducted in January 2018 by the Public Domain firm, canvassed opinions from 1,007 Bahamians, less than 5 per cent of whom did not have access to banking services in any form.

The Central Bank, though, argued that this likely “understated” the level of so-called ‘financial exclusion’ in this nation given that low income and immigrant populations were not fully represented among survey respondents.

“Also evident from the survey results, the demographic divide between income and age groups also has to be factored into policy approaches to financial literacy and inclusion, with vulnerability evident in some cases for older customers of financial institutions, and in other cases more so for lower income households,” the regulator concluded.

Turning to commercial bank fees, which remain the ‘hot button’ issue among the Bahamian public, the Central Bank said most persons surveyed understood that such charges were required to cover costs incurred by institutions in processing transactions.

“However, the ability to distinguish between direct government taxes and the institutions’ own charges is only possible for an estimated 42 per cent of the banking public,” the Central Bank found.

“In the meantime, the view is pervasive that fees are too high, with the most common products singled out being those related to payments services (ATM use, cheque cashing and deposits of cash and cheques.”

The Central Bank said the survey results showed Bahamians were “polarised” on the issue of whether banks deliver ‘value for money’, adding: “Thirty-two per cent of respondents agree that they receive value for money, while 29 per cent strongly disagree that they receive value for money.

“Similar disparities exist when the data is analysed on the consumers’ admitted understanding of why banks charge fees. Forty-six per cent understand why they are charged vis-à-vis 40 per cent that do not understand at all. In the middle ground, 14 per cent of respondents only partially understood why fees were charged.”

Nathaniel Beneby, Royal Bank of Canada’s (RBC) Bahamas managing director, revealed last December that the bank had introduced a $15 fee for cashing a non-customer’s cheque as a “deterrent”, hoping it would drive persons to use their own bank.

He suggested that moving customers to electronic and mobile banking, where fees are typically lower, would ease public concerns and pressure over ever-increasing bank charges and combat “all the noise in the marketplace”.

RBC and other Bahamas-based commercial banks have come under increasing public fire over ever-increasing fees in recent years, which a Central Bank survey in 2017 found had increased by up to 43 per cent within a six-month period.

Many Bahamians view the increases as tantamount to price gouging and exploitation in an already-depressed economy where wages are stagnant, and their protests were sufficient for the Government to announce the formation of a tripartite-style committee - featuring representatives from the private sector, trade unions and government - together with the banks to investigate the issue.

But the fee increases are also a likely banking industry response to reduced interest income stemming from the industry’s near-$1 billion past due loan pile, as well as the 3 per cent ‘Business License’ fee that the former Christie administration imposed on the sector in the 2014-2015 Budget.

The Central Bank, now moving to take the pulse of consumers, said that while fees were seen as too high there was no unified public view “on the direction in which they should be adjusted”.

“Forty-nine per cent of respondents opined that bank fees are too high, while another 29 per cent felt that fees were somewhat high,” the Central Bank said. “Although multiple products could be identified, ATM withdrawals was the most commonly viewed service as costly (21 per cent), followed by the monthly fees for checking account (9 per cent) and savings accounts (8 per cent).

“Disagreement with the level of fees charged was most concentrated for ATM withdrawals (41 per cent), check cashing services (23 per cent) and cash and cheque depositing (19 per cent). On average, about 49 per cent of those surveyed expressed a preference for bank fees to be adjusted downward versus 31 per cent that indicated no adjustment was necessary.”

Almost two-thirds of Bahamians, some 62 per cent, were found to hold the perception that bank fees in the Bahamas are higher than elsewhere in the Caribbean. And four out of every 10 Bahamians complained they were never notified of pending fee changes.

“By law, banks are required to give advance notice of fee changes on products, although awareness of when such change occurred, or whether such notifications were practiced, was limited,” the Central Bank said.

“Of persons surveyed, 43 per cent acknowledged that their bank did give notice of fee changes, while a separate 42 per cent indicated that they were not notified of fee changes. These outcomes could reflect how such notices are being made.

“Notably, respondents with experience of the process cited postal letters (29 per cent) and e-mail notices (29 per cent) as the two most common communication channels, versus 8 per cent that indicated being notified through the respective provider’s website. Other clients (24 per cent) indicated that they learn about fee changes inside the branch.”

The survey found that online/electronic banking penetration was on the rise, especially among Bahamians aged between 18-34 years-old, with 51 per cent of respondents revealing they had access to online banking. However, use of such channels was less frequent or ‘mostly never done’ for 38 per cent.

This age group was also found to switch banking provider the most, but the Central Bank added of the data: “It suggests that between 15 per cent to 20 per cent of customers view the process of changing banks as being too cumbersome. This, therefore, impacts the mobility of customers across the banking system.”

As for the 33 per cent, or one-third of Bahamians, dissatisfied with their bank, the Central Bank said: “The top reasons chosen included unsatisfactory customer service, high service fees and long wait-time in branches.

“Another source of dissatisfaction is the difficulty experienced in obtaining credit, although only as highlighted by 8 per cent of respondents.”

Comments

observer2 8 months ago

The government, regulator and consumer protection agencies are doing nothing to protect its citizens against the predatory practices of the Canadian bank cartel. If they provided these types of services in Canada their licenses would be immediately revoked.

Instead a massive entourage of government officials go off on OAS meetings/"vacation" to Peru at untold cost to the Bahamian people with no accountability of cost and nothing to show for it.

We call ourselves an offshore financial but you can't do basic banking such as:

  1. Electronically transfer funds from one commercial bank to a customer at another bank

  2. Very soon there will no banks in Long Island

  3. $15 to cash a cheque if you are not a customer of the bank

  4. Electronic bank statements are not available online and put into the dysfunctional Bahamas post office system, taking 3 months to deliver, possibly lost or worse.

  5. Two tier authentication for transfers not available on certain Bank Apps. Increasing the level of internet bank fraud. Causing massive amounts of spam and fishing for your bank information.

  6. 1/2% unconscious conversion fees from US$ to Bahamian dollars going directly to bank profits.

  7. Commercial bank profits and insurance company profits the highest ever. Customer service the worst ever.

  8. Terribly long lines at the banks.

  9. $2 to deposit a check in the bank.

  10. 4 day wait to clear a check in the bank. 2 day/48 hour clearance excluding deposit date and withdrawal date.

  11. It cost $60 in fees to send US$250 to pay educational costs abroad. Even higher if foreign exchange to Canadian dollars is involved.

There is no solution in site only talk, talk and more talk from those in power.

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ohdrap4 8 months ago

Electronically transfer funds from one commercial bank to a customer at another bank

yES YOU CAN, BUT IT COSTS ANYWHERE FROM 22 T0 45 DOLLARS. LOL

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ohdrap4 8 months ago

$15 to cash a cheque if you are not a customer of the bank

THEY JUST STOPPED CASHING CHEQUES FOR NON CUSTOMERS.

PROBLEM SOLVED. NO COST NOW.

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joeblow 8 months ago

Bahamian society is simply a cow that is being milked by whosoever will!

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Well_mudda_take_sic 8 months ago

And it's all because the Minnis-led FNM government cares much more about the racketeering web shop thugs like Sebas Bastian and Craig Flowers than they do about honest hard working Bahamians.

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OMG 8 months ago

Started before change of government.

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Well_mudda_take_sic 8 months ago

I'm fully aware our government's love affair with these low-life thugs began under Christie, but we certainly didn't expect the lovefest to continue under Minnis. The banks are struggling to make ends meet as more and more Bahamians get sucked into the money-laundering and other criminal activities of the numbers bosses which now seriously undermine the normal lending activities of our banks.

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TheMadHatter 8 months ago

The fees are one thing - but the INTEREST RATES are the worst problem. A simple comparison of rates here vs usa and canada will make your hair fall out. Also the fact that banks to NOT have to provide you with a statement or any info whatsoever on consumer loans (only mortgages) is just silly - especially in this age of computers and online accounts. With an online account you still cannot see your current balance, because charges are held in a separate account until they are "capitalized". It is trickery and smoke screening and it is currently legal.

Before you get a loan with a bank, pretend you are getting married - where there again they don't tell you it will cost 3 to 4 thousands dollars for a divorce - they just tell you that you will live happily ever after. Nonsense.

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bogart 8 months ago

@observerer2....you mention that the government, regulator and consmmer protection agencies are doing nothing to protect its citizens against the predatory practices of the..... banks.....cartel....

Well the government, regulator and consumer protection ard all one and the same. The govt chooses the Governor of the Central Bank along with its board of directors , and the govt created the consumer protection agencies whose salaries they pay......added to this is the govt majority owned bank of the Bahamas who was allowed to operate and take in then unapprovedweb shops business and operate without full capital ratios in violaton of bank regulations.....added to this its shares ard traded on BISX buying and selling shares agency which is 40% owned by the govt vis Central bank on which all competing banks also trade shares....added to this the minority BoB private sector shareholders complained for many years of not having its interests represented on the board....added is the Resolve loans mattr not worth value of assets govt created....added to this was a report of the Central bank carrying too many govt securities on short term liabilities.......added to this mix is RBC has been the govt bank with overdraft facilities loams etc to pay the govt monthly salary bill..?....added to this is that banks all carry millions in govt treasury securities .....Soooooooo... who do you want to stand up for the consumers..protect customers.......people...???? ....at least up to now....

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sheeprunner12 8 months ago

The Government is saying RBC and Scotiabank are not pulling out ........ but the bank workers in the loop will tell you something different ....... Say we gat ONE year to go!!!!!

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bogart 8 months ago

@Sheepr...While they certainly cannot grow because the govt keeps injecting funds, allowed funds from then unapproved web shops gambling, blocked bob bank from suing Regulator, with PUBLIC taxpayers money stopping market forces free enterprise,and competition from happening..propping up BOB.....the other banks are deeply embedded loans.securities loans need investigations in terms of debt service ratios followed etc massive mortgages failure loan policies being massively changed..intertwined with each other for any bank to leave........what they seem to be doing is mimimising risk by shedding as much and passing as much to others....ie New York stack exchange and let SEC have conversation with local regulator.... The EU blacklistingg ddid not come from a number of countries....it would have been certainly started by banks complaining of unfair competition to their govts who then acted....

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sheeprunner12 8 months ago

Unfair competition ......... meaning the webshop "banks" ........ with their transactions and loans etc????? ........ Blame Christie for that.

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Well_mudda_take_sic 8 months ago

But also blame Minnis, KP and Central Bank Rolle for allowing the racketeering low-life thugs like Sebas Bastian and Craig Flowers to remain in business.

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