Canadian Economist Warns of Potential Consumer Service Fee Increases After Central Bank Blocks Scotiabank's Online Transfer Fee

Forte also saw this decision by the regulator as one it may have been forced to take due to an accumulated imposition of bank fees over the years that have adversely impacted individuals and businesses and in a situation where it relied on moral suasion.

“So, I think, both the government and the Central Bank have felt somewhat, I suppose, pressured to act to rein in banking fees, and this most recent action appears to be in line with that objective,” the economist said.

He also suggested that the banks’ decision to impose fees over the years may be their effort to restore a level of profitability due to the government’s “burdensome” taxes on them, particularly the asset levy which is akin to a property tax.

“The banks are paying the asset tax,” Forte explained. “This is not a partisan issue because this particular tax was [in place] under both administrations. When the government is sanctimonious about the banks increasing fees, the government must recognise and acknowledge that it, too, has some responsibility, in as much as they have imposed an onerous tax on banks and financial institutions that ultimately is paid by the consumers.”

He also contended that the foreign exchange transaction fee, which was imposed by the Freundel Stuart administration, was also still in place, although the conditions under which it was implemented no longer exist.

“The foreign exchange fee was imposed to do two things: generate revenue but also to dampen the demand for the use of foreign exchange given that the foreign reserves were declining. Now, in 2024, we have a situation where the reserves are at record highs. We are told, on all accounts, that the public finances are in good stead, but yet consumers and businesses who transact business and have to get foreign exchange must pay a fee. That also constitutes a banking fee,” he pointed out. “So, there is some degree of hypocrisy where the government may be playing to the gallery.”

Meanwhile, the Barbados Consumer Empowerment Network (BCEN) said it strongly supported the Central Bank’s directive to the banks.

It said in a statement: “BCEN commends the Central Bank for its proactive stance to safeguard the interests of consumers. The decision to prevent Scotiabank from imposing fees on electronic transactions is a significant and positive step towards ensuring that Barbadian consumers are protected and can enjoy the benefits of digital and online banking without being saddled with additional and unnecessary fees.”

In an era where electronic transactions have become the norm, the consumer advocacy group said financial institutions must adapt to changing consumer preferences and not penalise consumers for adapting to the same technological advancements that banks themselves have been encouraging customers to take advantage of.

“Enough is enough,” declared BCEN. “It is highly contradictory that banks themselves are seeking to adopt and implement greater cost-saving measures by moving towards more technological advancements in the services that they provide, yet these same banks want to charge and penalise customers for taking advantage of the same technological services they provide. More regulatory compliance measures that protect customers are needed.”

The organisation said it looked forward to the Central Bank doing more to ensure that consumer interests remain at the forefront of financial policies and regulations.

“BCEN stands ready to support further initiatives that promote financial inclusivity and transparency in Barbados,” it said.

[email protected]