Bank 'horror'! CAC head says customers reeling from dormant fees

 Edmond Campbell, Senior Staff Reporter

Dolsie Allen, head of the Consumer Affairs Commission (CAC), has described as "horror stories" a plethora of reports from consumers about how banks have wiped out their savings through monthly fees for dormant accounts.

Allen, the chief executive officer of the consumer watchdog agency, made an impassioned plea on Tuesday to members of the banking sector to remove the charges for dormant accounts.

"A lot of people go abroad for a period of time and they would have put their funds in the account hoping that when they come back home, they will have funds to use. We have had some horror stories about some of these accounts that have been almost totally depleted over a period of time," Allen told Parliament's Economy and Production Committee.

The CAC was invited to make a presentation on the vexed bank-charges issue, which is now the subject of parliamentary deliberation. A motion was moved by government Member of Parliament Fitz Jackson for the central bank to present a report on bank fees. The document was submitted and the committee has summoned various stakeholders to make submissions.

SIGNIFICANT INCREASES

Allen told the committee that there had been significant increases in bank fees since the Jamaica Debt Exchange in 2010 and the subsequent National Debt Exchange in 2013.

Allen said that in just one year, First Global Bank's fee for dormant accounts skyrocketed by 100 per cent, moving from $300 in 2009 to $600 in 2010. In 2012, the charge for dormant accounts increased further to $750.

Commenting on the central bank's explanation that dormant accounts posed a high risk, Allen argued: "I don't think the consumer should be held to ransom because of the credibility issue or the honesty of their workers."

Allen said in 2008, when the CAC released its publication on bank charges, the National Commercial Bank removed its fees on dormant accounts; however, she said, the institution subsequently reintroduced the charge.

Last week, Gayon Hosin, deputy governor of the BOJ's Financial Institutions Supervision Division, told the committee that charging for dormant accounts was a phenomenon that applied internationally.

Said Hosin: "Dormant accounts pose higher risks for banks as they are natural targets for attempted fraud (both internal and external). It requires the banks to exercise a greater level of due diligence in terms of transactions, and so the cost that is imposed is one that is intended to deal with the cost of that higher level of due diligence."