Bank customers to get consumer protection with help from BMA
Government will expand the powers of the Bermuda Monetary Authority to ensure banks treat their customers fairly, legislators have been told.
Other financial institutions will eventually be included, with an aim of further developing the existing conduct requirements for the financial services sector.
A ministerial statement to the lower house by Curtis Dickinson, the minister of finance, disclosed that the authority is about to issue a draft code of conduct for public consultation, and finalize it by year-end.
Having already discussed this with government, the banks - who will work in tandem with the Department of Consumer Affairs - will be given a transition period to become fully compliant.
Technical discussions already underway, together with the feedback received during the next phase of the consultation process, will inform required changes to the consumer affairs regime.
In the interim, the authority will proceed with the new code of conduct.
The government believes the existing regulatory framework should be enhanced to require more from Bermuda’s financial institutions, especially in protecting the interests of customers.
Officials want the authority to adopt clear and consistent regulatory processes to achieve the objective of better consumer protection.
The minister told parliament that at present, the BMA has no specific power to protect the customers of financial institutions.
He said: “It is proposed to amend the Banks and Deposit Companies Act 1999, to provide a power for the authority to issue codes of conduct in relation to the manner in which an institution conducts deposit-taking business.
“It is also proposed that appropriate changes will subsequently be made to the customer-facing component of the regime, which will fall under the auspices of the Department of Consumer Affairs. “Thus, matters relating to customer complaints will be overseen by the department.
“Discussions between the authority and the department have commenced and will continue to be progressed to ensure that the overall regime achieves the objective of providing appropriate protections to the customer.
“As part of this work, there will also be amendments made to regulatory and other legislation, to allow for appropriate sharing of information.”
The BMA won’t be an arbiter of complaints, but will ensure the appropriate policies, processes and internal structures are in place so that the institutions treat customers fairly, and fully entertain customer complaints.
The BMA reviewed globally accepted best practices for conduct standards and studied how financial services supervisors could develop an effective conduct framework.
The authority concluded an eight month consultative process in April, gathering views from the public.
Minister Dickinson informed the House of Assembly that proposed amendments to the Banks and Deposit Companies Act include: expanding BMA powers to protect customers and promote their fair treatment; empowering the BMA to get information and reports on an institution’s codes of conduct; obliging licensed entities to comply with codes of conduct; and, providing for information sharing between the authority and Consumer Affairs.
The BDCA will also be empowered to obtain information and reports regarding the safeguarding of the interests of clients and potential clients of an institution.
As the conduct supervisory framework matures, the authority aims to establish a dedicated unit devoted to conduct supervision.