Governor of the Central Bank of Barbados, Cleviston Haynes.
THE Central Bank of Barbados is taking steps to deal with the vexing issues of bank fees, which Barbadians continue to complain about.
Yesterday, the Bank assured them that their interests will be safeguarded when it comes to that, as it will be looking to deal with it.
The island’s Central Bank Governor, Cleviston Haynes, promised that action will be taken, including looking at precedents set in other Commonwealth countries.
In an address to the Barbados Association of Insurance and Financial Advisors (BARAIFA), yesterday at the Lloyd Erskine Sandiford Centre, Haynes said that new guidelines will be sent to the banks.
“In addition, it is our intention to publish on our website key fees and charges of the respective institutions as is done in several of our regional counterparts, as customers need to be aware of their options when conducting transactions,” the Governor promised.
He pointed out that while the banking industry is largely compliant with guidelines the Central Bank had issued in 2008, in the interim new charges have arisen, an inherent weakness in trying to maintain price controls.
He told the BARAIFA meeting that while Barbadians have preferred to place their money on savings accounts and allowing the funds earn interest, they are confronted with charges associated with maintaining their account.
The charges include ATM fees, teller fees, minimum balance fees, payment fees, large value withdrawal fees and among others, service charges.
“These fees in the current low interest rate environment create the impression that persons will be charged more for maintaining a bank account than what they are earning from it,” he reasoned.
“You could then be faced with a situation where persons withdraw from the financial system either because they cannot afford to have a bank account or because they are not willing to pay the banks to keep their money,” according to him.
Governor Haynes explained that historically, banks generate most of their income from the differential between interest income earned and interest expenses. In recent years, this business model has shifted across the Caribbean and further afield, resulting now in greater emphasis on fee income.
The Governor said that the rationale offered for the increasing level of fees includes the high regulatory cost of compliance and the need to recover costs associated with the banks’ investment in technology.
“In addition, some charges are predicated on moving customers away from the non-electronic modes of banking and therefore, I think some banks are trying to discourage customers from using the facilities in the bank and wishing them to use the ATMs where much of the investments have been placed,” he added.