Time to regulate banking, finance

THE RAINY DAY is a phenomenon that provokes the idea that saving is essential, in case bad or no planning has been initiated.

When careful planning has been put in place, and the end result is no different from the lack of preparation, this makes one wonder, what is the point?

Information is reaching us that some commercial banks are contemplating reducing interest rates to savers to as low 0.05 per cent, on some accounts. This writer is reminded of his mother, suffering from dementia in her old age, deciding that her monies were safer when placed in a hole by a banana tree.

Could it be that the very body responsible for regulating the commercial banks, the Central Bank of Barbados, in efforts to compete with these banks for people’s monies by offering an interest rate over five per cent for savings bonds, has been neglecting in its role as regulator.

The bank cited in the press, CIBC FirstCaribbean, is the result of a merger with the then giant of a bank, Barclays Plc, back in 2002, with combined assets in excess of US$12 billion.

We continually learn that the banking sector is awash with monies. They call it “excess liquidity”. What would encourage banks to offer its consumers interest as low as 0.05 per cent, or even 0.15 per cent, while charging interest rates as high as 28 per cent annual percentage rate (APR)? Is it feasible to conclude that greed is the answer?

The banks need to understand they cannot rape the people of this small country of their monies in this dastardly way. It has to stop. When you add this to people not getting pay increases and the novel way the Government is finding to tax people, how do they expect people to live?

That these proposed changes are dictated by global and regional pricing trends reminds of the argument that Cable Wireless Barbados Limited (C) used, during 2003/4, when requesting the Fair Trading Commission, as regulators, to grant them per-minute-billing on landline telephones.

Thanks to the Barbados Consumers Research Organisation, we never bought into that argument. And in spite of C appealing the decision to the High Court and the Court of Appeal, today we are happy to report that we still do not have this type of billing.

Added to this imposition, there are charges for having an account at the banks: monthly charges, ATM charges, charges for withdrawal of monies through the tellers, various processing charges, even charges for accounts that are made dormant by the banks. This list is by no means exhaustive.

While we have no brief for any credit union, consumers need to move towards the credit unions, as long as they give a sensible return on one’s monies.

We were able, with financial help from the Inter-American Development Bank, during 2009 to 2012, to get regulation to allow consumers of the commercial banks in Barbados to have up-front information for intended services, before those services are actually engaged, as is the case in the developed countries. Further regulation is needed for the banking and financial sectors.

– REV. H. MALCOLM GIBBS-TAITT