MPs fear consumers at mercy of bankers, increased fees
Published:Wednesday | January 29, 2014 | 12:00 AM
Edmond Campbell, Senior Staff Reporter
A parliamentary oversight committee is expressing fears that customers of the various banking institutions will remain at the mercy of some financial entities in relation to increased banking fees as the proposed enforceable code of conduct does not speak to the vexed issue of exorbitant bank rates.
"Our deliberations will have no meaning if we come up with a code that does not speak to some form of regulation in a monopolistic environment," said Paul Buchanan, member of the Economy and Production Committee.
Buchanan argued that some banks enjoyed near monopoly status by virtue of the capital accumulated.
He added: "So we are not on a level playing field. We are in a price inelastic environment, which means they can move prices without fear of market penetration."
protect consumers
He said at the core of the committee's deliberations was the protection of the Jamaican consumer.
His colleague, Mikael Phillips, agreed, noting that if it took the bankers such a long time to sign on to a voluntary code of conduct, then it raised questions about who would protect the Jamaican consumer.
Robin Sykes, general counsel at the Bank of Jamaica, told the committee that if bank fees formed part of the proposed code of conduct, they would pose a moral hazard to the institutions.
"It is our view that trying to regulate fees constitutes what would be a moral hazard because if an institution goes down and the claim is that it is an issue of being regulated, in terms of fees, it is a moral hazard for the banks," he said.
He said the banks would be moving towards market disclosure, which was akin to securities regulations, where all parties have the information before them to make a decision.