Banks blasted by PLP as BMA gets new regulatory powers
The Government will have the ability to dictate to banks what fees they can impose on customers under legislation passed in the House of Assembly on Friday.
The Banks and Deposit Companies Amendment Act 2022 will also enable the Minister of Finance – through the Bermuda Monetary Authority – to impose a code of conduct on companies conducting deposit-taking business.
Financial institutions will also have to provide details of their business practices on request from the BMA under the new law.
A failure to comply with the code “may lead to regulatory sanctions, including revocation of licence”.
David Burt, the Premier and Minister of Finance, said in the House of Assembly that the island’s financial institutions were charging fees “outside of global norms”.
Mr Burt described the Bill as “an important provision to enhance consumer protection” and would bring Bermuda “in line with international standards”.
He added that current provisions were primarily concerned with preventing breaches of law rather than focusing on ”fair outcomes for consumers“.
He told MPs that he knew of one case in which a bank customer was billed more than $1,000 after going over the limit on their credit card.
According to Mr Burt, the customer was charged $50 for every transaction they had made on the card after going over the limit – resulting in fees of $1,050.
He said that the practice had been outlawed in the United States and Britain more than a decade ago and should not be allowed in Bermuda.
The new laws will enable the BMA to “expand its statutory remit” to promote “the fair treatment of financial service customers”, he said.
When quizzed by the opposition One Bermuda Alliance, Mr Burt stressed that any changes to regulations would only be made after consultation with industry stakeholders and the BMA.
Mr Burt said: “I have full and firm confidence in the BMA that they will do what is in the best interests of the totality of the banking sector while insuring that consumers are protected.”
Cole Simons, the Leader of the Opposition, said the Government should leave the BMA to do its job “without political interference”.
“I believe that if we left the process to an industry body it will protect the minister and other MPs from getting involved with the regulations and any commercial operational business fees,” he said.
But Mr Simons appeared to score an own goal when he asked the Premier why legislation had not been introduced earlier.
Mr Simons, who is employed by the Bank of Butterfield, said the creation of a banking code of conduct under the legislation was long overdue.
He said: “Why now? The PLP has been in government since 2017. There has been a systemic failure on behalf of the Government … it should have been here years ago. Someone has dropped the ball.
“I see what the Government is doing, I don’t think it is unreasonable. My only comment would be that we are behind other jurisdictions.”
The Premier responded by producing a Hansard copy of a speech he had given as shadow finance minister in 2013 – just months after the OBA had been elected into office – in which he called on the new administration to change the law because banks were “punishing” customers with unfair fees.
Mr Burt noted that the Government of the day did not respond.
He said: “If the Opposition had followed the advice that I had given in a request in 2013, we wouldn’t be discussing this right now.
“I take the opposition leader’s points that this should have been implemented a long time ago. I agree. I can accept a measure of criticism. But what I can also say that I’m grateful that we’re pushing this particular matter forward. This is something that I’ve always considered important.”
Jache Adams, a government backbencher, said: “It is my hope that the banks are able to address these issues without the Government’s heavy hand but if they are unable and unwilling to do so, I appreciate how this piece of legislation now gives the minister the ability to act.”
Walter Roban, the Deputy Premier, said that there had been a call from the people for a more level playing field with the banks.
He said: “It will not be dictated by the Government … this is not to poke into the daily activities of banks – there will be some issues with the regulation of fees. These are standards and processes and frameworks that they deal with in other jurisdictions. In Bermuda we are modernising and updating.”
Tinée Furbert, the Minister of Social Development and Seniors, said that the public’s consumer financial protection was “vital” and that banking was “an essential service”.
She said: “We have a growing population of seniors on fixed incomes and every penny of theirs counts. We have to do our best to protect people with limited income.”