Regulator introduces interim directions to enhance disclosure requirements
NASSAU, BAHAMAS — The Central Bank has proposed to develop new regulations governing fees charged by Supervised Financial Institutions (“SFIs”) that would take effect in 2025, following an appropriate period of public consultation.
As a precursor to this action, the Central Bank is issuing an interim direction to enhance disclosure requirements for SFIs. This direction applies to domestic banks, credit unions, money transmission businesses, and payment services institutions.
The regulator, in a notice issued yesterday, stated that it “considers access to financial products and payment services as fundamental to facilitating the equitable participation of individuals and business persons in the economy and that the charges imposed on customers for such services should be reasonable and transparent, having regard to the cost of supplying these services.”
“Towards this end, the Central Bank proposes to develop new regulations governing fees charged by Supervised Financial Institutions (“SFIs”), which would take effect in 2025, after an appropriate period of public consultation. As a precursor to this action, the Central Bank is issuing an interim direction to enhance disclosure requirements for SFIs. This direction applies to domestic banks, credit unions, money transmission businesses, and payment services institutions,” it added.
The Central Bank has directed SFIs to comply with the following directives, which will take place with immediate effect:
i. Provide customers with a minimum notice of 30 days of the schedule listing any variation in transaction fees or account charges to be imposed on any product or service, including but not limited to deposit accounts, credit facilities, or any payments-related transactions using cheques, credit cards, debit cards, and digital wallets.
ii. Provide customers with a schedule outlining the estimated or forecasted change in revenue associated with each varied fee or charge.
iii. Provide the Central Bank with the schedule of proposed variations in fees and forecasted revenues, a minimum of 60 days before the proposed change.
iv. Disclose or make readily available to customers the comparable schedule of the varied fees for the same or similar financial products at competitor institutions, as of the date of the notice.
The Central Bank of The Bahamas stated that the conditions of this direction shall take immediate effect for all SFIs.
Last month, Central Bank Governor John Rolle acknowledged that there were legitimate concerns about banking fees amid heightened calls for banking reforms raised on both sides of the political divide.
Foreign Affairs Minister Fred Mitchell has stated that legislators may need to intervene if the Central Bank fails to take more aggressive action on commercial bank fees. Minister Mitchell previously urged the Central Bank to be more proactive in regulating these fees, citing the successful example set by the Central Bank of Barbados.
Free National Movement leader Michael Pintard has stated that his party would reform the banking system if elected, expanding the Central Bank’s authority to assess fees and prevent unjustified “junk fees.” Pintard called on the Davis administration to provide “comprehensive” banking reforms to end “unjustifiable” bank charges.
Clearing Banks Association Chairman Gowon Bowe told Eyewitness News on Wednesday: “It’s a bit disappointing it was issued in the manner it was. It suggests that this is a directive that takes immediate effect. These are matters that have been discussed with the Central Bank. It’s not a complete surprise, but the nature of the press release being on October 2 and us not having advanced notice is inconsistent with the general relationship with the Central Bank and commercial banks.”
Bowe added: “The Central Bank has been under tremendous pressure from both sides of the political divide and as well as consumer sentiment. I think the Central Bank has done a good job taking a measured approach in response.”
Bowe noted that banks already post their fees on their websites as a Central Bank requirement.
“One thing I would want to understand is what that level of notice is being benchmarked against. Thirty days’ notice for a bank is going to be 30 days of emotional complaints and criticisms, and the question is does that have any real intrinsic value in addressing the debate?” said Bowe.
He added: “Hopefully the Central Bank has thought that through in terms of how they will function as arbiters and be a part of the education process and ultimately wider involvement in overall financial literacy.”
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