Service standards set for ABMs

Parliamentarian Fitz Jackson says he will be seeking clarification from the Bank of Jamaica (BOJ) regarding penalties for deposit-taking institutions (DTIs) that breach the new service standards for the operation of automated banking machines (ABMs).

The BOJ, in a statement Tuesday night, outlined new service standards as guidelines for the operation of ABMs by DTIs that it regulates.

The new standards address the availability of cash, infrastructure maintenance, and the management of service disruption. It also covers the ABM fees and charges, the deployment of machines, accessibility and ease-of-use, fraud minimisation, the safety and security of customers, and financial education of ABM users.

Acknowledging the “far-reaching” nature of the service-level standards, the BOJ has given institutions a nine-month transition period to conform with the guidelines. Compliance will be assessed through the BOJ’s review and publication of monthly reports from the entities.

However, the BOJ noted that no monetary sanctions would be applied for breaches of the guidelines. It said, though, that non-adherence “may give rise to supervisory concerns around safety and soundness with the attendant supervisory consequences”.

Lack of clear sanctions

While stating that the new service standards are “wide and comprehensive”, Jackson, the Opposition member of parliament who had first highlighted the need for such measures in a resolution before the economy and production committee at Gordon House, has raised concerns over the lack of clear sanctions for violations.

“They’ve explicitly said that there was no financial penalty. I have an issue with that,” he told The Gleaner. “But I don’t know what supervisory consequences are, so I intend to have that clarified with the BOJ now, when we meet with them.”

Julian Robinson, the opposition spokesman on finance, also expressed reservations over the BOJ’s ability to hold the banks accountable if they violate standards.

Robinson also told The Gleaner that the implementation period for the new service standards is too long.

“I would have hoped for something in three to six months, given that these issues have been ongoing for quite a long time now,” he said.

Jackson, in the meantime, labelled as “commendable” the requirement for banks to implement systems for real-time notification to DTIs when a machine is out of service.

“They now have requirements to make sure the machines are not down beyond a certain period of time. They are required to give SMS real-time notice to customers when machines are out, which is just an easy technological solution that is available,” he said.

ABM downtime rules

Among the new service standards outlined is the stipulation that ABM downtime should not be for more than three consecutive hours and customers within a specified geographical radius to be provided with information on nearby ABMs and the banking services they offer.

The DTIs are also expected to have a minimum 90 per cent of ABMs operational, with a minimum 95 per cent uptime for operational ABMs.

Additionally, the ABM should not be out of cash for more than one hour in urban and resort areas and three hours in rural areas. Further, banks should have a board-approved ABM cash-risk-management policy and procedures.

The BOJ noted that the ABM standards have been issued in a context where despite the increasing availability and use of electronic payment methods, a significant number of Jamaicans still rely on cash to conduct transactions.

Customers have increasingly expressed frustration over the frequency with which ABMs are out of service, an issue that has worsened as criminal groups have been targeting ABMs and cash-in-transit operations.

The central bank says the service-level standards have been developed as best-practice principles governing the management and oversight of ABMs by DTIs and form part of ongoing work to promote fairer treatment and enhanced protection for financial consumers.

“The issuing of the standards follows consultations with the DTIs, and the guidelines have been put forward against the background of the development of a more robust market conduct and consumer-protection framework for the financial services sector.”

Audrey Tugwell Henry, president of the Jamaica Bankers Association (JBA), speaking with Television Jamaica’s Javaughn Keyes, said the JBA was very supportive of the service standards.

“We recognise and we understand the need for close scrutiny and close oversight of the ABM channel because, of course, it is the most used channel locally even though we’re seeing very good growth in digital and mobile offerings,” she said.

She added that the process of establishing the standards was consultative.

The BOJ said monthly reports on the performance of each DTI’s fleet of ABMs would be published with a two-month lag.

These reports will include the geographical distribution of ABMs, the number of machines that were installed, the proportion of ABMs that were operational for the reporting period, the uptime for operational machines over the period, and the recovery time for malfunctioning machines.

The central bank said the new framework would be supported by appropriate legislation under the Twin Peaks system of financial sector regulation, which is being developed.

In the meantime, Jackson said he was optimistic that these new service standards would result in customers experiencing fewer inconveniences when using ABMs.

“Jamaicans on a whole know, and the banks know, that you can’t just go and operate in any willy-nilly way, close a ATM, it being down for an extended period, nobody knows when it’s going to come back up. That no longer will exist. It has a duty and an obligation to maintain,” he said.

sashana.small@gleanerjm.com