The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior banker yesterday said the industry is open to “justifiable criticism” over customer service standards, transparency in fee-setting and the transition to a digital payments system.

Gowon Bowe, the present Clearing Banks Association (CBA) chairman, told Tribune Business he personally is “not running away” from such concerns and added that the sector and its individual institutions “welcome objective criticism” on these issues.

Disclosing that he will be arranging meetings on the commercial banks’ behalf with both the Government and political Opposition, as well as the staging of public forums, to discuss the long-running controversy surrounding fee increases and other banking issues when he returns to The Bahamas next week, he renewed calls for an end to “political mud slinging” and an emotional, “combative” approach to the matter.

Mr Bowe, though, also pushed back over what he branded as “a cavalier approach to criticising” the Central Bank regarding its regulation of commercial bank fees and the industry generally. He warned that this was the “wrong message” to send, especially internationally, as it “calls into question the competence and credibility” of the Bahamian banking industry’s primary regulator.

The latest concerns surrounding bank fee increases were sparked by CIBC Bahamas revealing plans to raise its charges to compensate for higher operational costs, and the Association chief argued that the best way to address public concerns is via a “candid, critical and open conversation”.

The best result, Mr Bowe said, will be to create better-educated consumers who switch their banking business to a different institution if they feel they are being exploited or taken advantage of by fee hikes and other impositions. Such competitive pressures, he added, will keep banks keen and honest in their treatment of consumers.

The CIBC Bahamas fee rises were seized on by the Free National Movement (FNM) Opposition in a bid to extract political mileage, with the party then unveiling a series of commercial banking sector policy reforms and pledges. This appeared to prompt the Government, and Prime Minister Philip Davis KC, to intervene by promising it would meet with the banks to address the public’s fears.

“I think that politicians, both the Government and Opposition, find the banking sector as just a target when there are customer complaints to create a sort of combative stance between us and them,” Mr Bowe told Tribune Business.

“I think we become a little emotional and, to be perfectly honest, I think the best [way to address it] is to have a very candid, critical and open conversation around it and not get into this political mud slinging. To be honest, I think that’s the best course of action.” However, the CBA chair was to quick to acknowledge that Bahamian commercial banks are not immune from constructive criticism.

“I don’t run away from areas where the commercial banks are justifiably criticised,” Mr Bowe said. “I think that when you look at the transparency around the determination of fees, the overall need of a digital payments system and how we keep those costs minimal, and when we talk about service standards what is outsourced and maintained in this jurisdiction.

“These are all areas where the banks welcome objective criticism, and if we have strengthened consumer education where depositors take money out of an institution - from the smallest to the largest - that’s going to have a response. If shareholders take money out of an entity that is equally going to have a response. 

“Too often we rush to legislate morality instead of strengthening the knowledge of consumers so that they effect change through their behaviour, particularly where the banks are concerned.” Bahamian concerns over poor service and declining standards in the commercial banking industry have been growing in recent years and are as strong, if not stronger than, the consternation over rising fees.

Confirming that all sides, including both the Government and Opposition, have agreed to wait until Mr Bowe is back on island next week to arrange meetings and public discussions, the Association chair also branded attacks on the Central Bank over the fees issue as misplaced.

“The one thing that does concern me is there’s often a cavalier approach to criticism of the Central Bank whether intended or not,” he told Tribune Business. “Our Central Bank is a very well respected regulatory institution both internationally and domestically. The politicians almost jump to saying the Central Bank should do more and is not adequate in its regulation.

“That’s not the message we want to send internationally. The Central Bank has done a good job. If you research all countries, The Bahamas is one of the few that did not have any major bank collapses through the 2008-2009 recession, the crypto winter and the pandemic. Let’s give give credit where it’s due. Obviously they’ve been doing a good job maintaining financial stability.

“When they make these uninformed comments, with no analysis and empirical evidence, it’s purely emotional and rhetoric, you bring into question the competence and credibility of the Central Bank, which is highly inappropriate, particularly given that it’s recognised internationally as being a very strong and competent body. I think sometimes politics supersedes common sense. It also supersedes good sense.”

Mr Bowe continued: “The conversation needs to evolve, not degenerate into the political gutter. Hopefully the conversation with the Government and the Opposition, and forums to ventilate matters, brings some calm and reason to the conversation. It’s going to keep me busy for an unpaid position but it’s worth doing.

“We should not be arguing behind the shield of statements and parliamentary privilege. It is important to have an open forum conversation so that there will be education as opposed to continuing us versus them, which is naive because us versus them is the same people and it only creates a combative environment.”

Fred Mitchell, the PLP’s chairman and minister of foreign affairs, has been a long-standing critic of the commercial banks and their customer service quality but the Opposition moved to steal his thunder and present itself as the party of reform following the CIBC Bahamas announcement.

Michael Pintard, the party’s leader, pledged that an FNM administration if elected would ensure bank fees are transparent and fair, “not simply ‘junk fees’ with no justification”. He said his party would increase the reach and powers of the Central Bank’s office of the ombudsman, ensuring people are aware it exists and that complaints against banks are handled effectively.

He said the FNM would support qualified Bahamians seeking licences for commercial banking and financial services, and added that the party would “work with the banking sector to expand branch banking in Family island communities” and “implement targeted subsidies to ensure that Family islanders have access to banking services, enabling banks to at least break even in remote operations”.

A number of these initiatives, such as the ombudsman, are already underway. And the Central Bank, in its latest bank fee analysis, said: “The Central Bank is working on a number of fronts to advance targeted reforms on fee setting practices for supervised financial institutions.

“However, the Central Bank is mindful that these interventions must be framed to preserve the soundness of deposit taking institutions, which is fundamental to the stability and orderly functioning of the economy.

“Aside from interim measures under the remit of the Payment System Act (2012) that could take effect in the first half of 2025, broader reform proposals are also being explored that would enable the Government to legislate consumer protection and market conduct standards, also applicable to credit products, and which could give the Offices of the Financial Services Ombudsman statutory independence.”

The regulator added: “Where cost is a significant factor, the Central Bank continues to craft reform proposals that would achieve more universal access to the supply of financial services in the less populated parts of The Bahamas.

“This includes identifying where supportive changes are needed in the infrastructure to improve access to both cash and digital payment services, and the role that agency banking could play in lowering supply-side hurdles.

“On affordability and access, within the remit of the Payments System Act (2012), the bank is developing financial inclusion regulations to mandate a ‘basic’ deposit account product for consumers of low-economic means,” the Central Bank continued. 

“The targeted approach would be exposed to public consultation, and would also be accompanied by proposals to add more transparency to the fee setting process for digital wallets, credit and debit cards, and transactional accounts, which facilitate payments (savings and chequing accounts).”