WILD COOT: Like it or lump it
The two-page advertisement of the Barbados Bankers’ Association Inc. is an admission that in the global world of banking it has no say, it is a gnat and can be swatted like an annoying fly. Furthermore, our Government has been forced to acquiesce to a process, even after a tiny effort at suggesting a change (by the Government) that challenges our sovereignty or what we foolishly call sovereignty.
The long and short of it in plain language is that Barbados’ bankers are now obliged to breach customer secrecy and divulge to the authorities in the USA the banking transactions of their customers who have albeit the slightest connection to the USA, even if through a telephone number Magic Jack.
– Wild Coot, Daily Nation, July 21, 2014.
It is not a bombshell. I warned you.
Yesterday’s SUNDAY SUN reported that a managing director of CIBC said: “Any contract between our customers and the bank resides in the jurisdiction in which that contract has been signed and is subject to the laws of that jurisdiction. This also will not change.”
What it does not say is “subject to the laws of that jurisdiction only”. The letter to customers clearly states, inter alia: As a result, my information may be securely used, stored or accessed in other countries and may be subject to the laws of those countries.
As a fellow of the Chartered Institute of Bankers over umpteen years, I submit that this is a contradiction and I can think of several scenarios that can militate to the detriment of a customer. Perhaps if the “banker” wants to know, he can contact the Wild Coot.
I often boast that one thing in favour of the Barbadian is that in spite of the indebtedness of the Government, the island is not poor. We have the basic raw material to provide the building blocks of a prosperous island if only we had the knowledge and guts to use them. A country cannot be considered poor if its 280 000 or so people can comfortably stockpile almost $9 billion of savings that are underused by loans. The question to ask is, how are we using these savings? Perhaps more relevant is, what few are using the savings to its advantage?
In a modern economy there are few comparable alternatives to a bank. Today all banks are telling us “like it or lump it – take your business elsewhere”. Actually they have been saying so for quite a while but we are not listening. How else can you explain an increase in profits in a worsening loan portfolio – fees like fleas, or peas. To transfer a credit from a savings to a current account, $75! Many times I warned about the enticement to cheap mortgages, now they warn that they can change your rate without notice. Where is the Central Bank in all of this? I hope that this does not refer to a rate set for a fixed number of years, because that can be challenged.
Well, all commercial banks realise that they are in a hole. As they admitted, they have an obligation under the FATCA (Foreign Accounts Tax Compliance Act) to report all US dollar connections, otherwise the foreign banks will no longer maintain their connection in the US. This cannot be denied. The real point of the latest move of the letters sent to customers is permission to disclose data because of FATCA. The letters should be sent to everybody as the bank will not be sure when a customer’s data qualifies.
Banks are now telling their customers that they must agree to the dissemination of their private data to entities with which they are in collaboration in another country, mainly the United States. Failure to agree to this will mean that the bank will sever connections with the customer. What is interesting is that while the bank will exercise care with your data, if anything happens with that data (like, for example, if you become liable for tax in the US), they are not holding themselves responsible. All banks are involved in this. No use changing bank. So you may end up having to speak to someone in St Lucia or India about your account at Broad Street.
The banks have also taken the opportunity to farm out their operations to cheaper centres using the new technology. Does this mean reduction of staff as we have seen in other industries? Are you listening? Our politicians and the Central Bank are helpless. Shades of “bullyer” and “bullyee”!
• Harry Russell is a banker. Email [email protected]