The Tribune

Bowe: Moving toward a ‘communist state’ if we control bank fees

By EARYEL BOWLEG 

Tribune Staff Reporter 

ebowleg@tribunemedia.net

GOWON Bowe, the chairman of the Clearing Banks Association, said the country is “moving towards a communist state” when discussing regulating bank fees and services, calling this a “very slippery slope”.

His comment came after Foreign Affairs Minister Fred Mitchell urged the Central Bank to take a more proactive approach to regulating commercial bank fees.

Although local banks have generally made substantial profits in recent years, fees continue to escalate, frustrating residents.

Mr Mitchell highlighted the work of the Central Bank of Barbados as an example of a successful intervention to regulate fees.

In January, the Central Bank of Barbados mandated no fees for electronic transactions, including Automated Clearing House (ACH) and real-time payments (RTP) transfers. The bank also requires all commercial banks to offer at least one savings account free from fees or charges. Guidelines introduced in July require banks and finance companies to seek a non-objection from the Central Bank at least 60 days before implementing or increasing fees. Additionally, there are to be no fees for electronic transfers and no cash management fees for transactions under $10,000 per day.

Mr Bowe cautioned against “cherry-picking” aspects of Barbados’ regulatory regime, saying they may not paint the full picture.

“If there were a deep analysis performed, they would appreciate that this was to provide, if you will, a minimum, but it did not put any cap on other fees,” he said. “So, with the argument that transfer fees are now zero, but ATM fees are higher, in-person fees are higher.

“We have to bear in mind that everything is not ceteris paribus, the Latin phrase meaning ‘all other things being equal’. If we impose and fix one particular item, it is naive and actually ignorant to believe that all other things will remain the same.”

Mr Bowe, who is also president of Fidelity Bank, noted that the government had increased costs in certain areas, which the public criticised.

“What,” he asked, “has been the government’s response? We need to cover our costs, right? So is it not a bit hypocritical for a government to say it must regulate a private enterprise that is offering a service we would like to exist? Do you want people walking around with all their money under their mattresses and in their pockets? Is that a stable financial system?”

He argued that bank fees are essential to meet service needs and stressed the importance of consumer education.

"The bank comprises management, shareholders, depositors, and borrowers. While the criticism that banks might be exploiting customers is valid, determining this requires educating consumers on how to evaluate and assess the reasonableness of fees.”

“The reality is you can evaluate whether the bank you use is charging you a fee that you believe is reasonable relative to the service they provide and the costs they incur by making that critical analysis.

“When we get into this debate about mandating, regulating, or legislating the value of services for private enterprise, we are moving towards a communist state. We are saying that the government is a free market enterprise, and we have to be very careful because that’s a very, very slippery slope.”