Progressives call for UPM to take on banks
(CNS): Opposition Leader Roy McTaggart is calling on the UPM government to make Cayman’s high street banks implement a mandatory, modern code of practice, amend the Registered Land Act to enforce mortgage-type security over real estate, and ask CIMA to review the fairness of fees charged and interest rates paid on deposits. After years of low interest rates, banks had increased fees to improve profitability. But with eleven hikes over the last two years, bank profits are soaring while borrowers are struggling.
A private member’s motion filed by the PPM leader and seconded by his deputy, Joey Hew, notes that the agreement by local banks to give a 30-day notice before increasing mortgage interest rates has expired, though it did nothing to help those with increased payments, putting homes at risk of foreclosure and forcing them to come to government when they cannot afford mortgage payments.
McTaggart said the Law Reform Commission has already initiated a public consultation to consider a new Registered Land (Amendment) Bill, which the government could adopt. The goal is to reform the foreclosure process and to streamline the provision impacting the charge of land to provide for a lending and pre-action protocol to better protect borrowers.
The opposition said they want the government to encourage the Cayman Islands Banker’s Association to introduce a voluntary banking code that recognises the need for them to consider cases of financial difficulty sympathetically and positively, exploring options for alternative repayment arrangements for those in financial trouble. If not, the motion calls for government to consider legislation to provide for a mandatory code that will hold the banks accountable and protect their customers, especially those with mortgages.
The PPM members are suggesting that the code should be based on the one rolled out in the UK last year, which imposes a duty on banks to their customers, requiring them to deliver good outcomes and higher standards of consumer protection, including for loan foreclosures.
They have also called on the government to ask CIMA to review and report back to parliament by the end of this calendar year on the fairness of fees charged by retail banks and the fairness of interest rates paid on savings and other deposit accounts, ensuring that these rates and fees are fair and equitable for all customers.
While interest rates have reached the highest levels in decades for borrowers, the interest rate paid to customers with savings accounts or cash on deposit has barely moved from as little as 0.1% in some cases.
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Category: Banking & money, Business, Politics
This is RICH! Tara, Wayne were both PPM ministers for Financial Services and did nothing, absolutely nothing and now Roy is joining the ranks of Cryin Bryan on Social media….
What are you talking about? Tara was the one to initiate the Law Reform Commission’s review of the Registered Land Act that Roy is referring to. That is why there is a bill ready to be acted upon now. Check your facts!
Rivers points to foreclosure conflicts : Cayman News Service https://caymannewsservice.com/2017/11/rivers-points-to-foreclosure-conflicts/
Law reformers examining foreclosure regime : Cayman News Service https://caymannewsservice.com/2018/12/law-reformers-foreclosure-regime/
Clock ticks for input on mortgage law reform : Cayman News Service https://caymannewsservice.com/2019/04/input-mortgage-law-reform/
I read some of the draft papers to consider these issues.
Instituting a form of pre action may not translate to better consumer protection as the banks may impose stricter lending criteria to protect themselves.
In my experience, the main problem is that once a loan is behind the account is referred to another jurisdiction. Simply put it is automated and someone in Nassau or Trinidad don’t care who you are or why you are behind in payments. Their job is to keep the social side out and collect payments. They have job performance metrics that they have to meet. This sounds harsh but processes demand neutrality to get results.
Members of the UPM government went on social media to rescue a homeowner. What about the others? Just because you are a supporter of the government of the day you deserved special consideration?????
Administering delinquent loans is a full time position and requires alot of labour. This is all about dealing with volume to keep costs down too.
In today’s technology and digital landscape, the social aspect of doing business has declined. You either meet the requirements and maintain payments or you are toast.
There is no going back to the good ole days when you could call and say you had a death in the family or fell ill etc. and the banks would work with you. Unfortunately, people have also changed and are not as honest and started making excuses and not honouring their promises once given a concession.
I am a banker and I always tell customers that should your financial situation change for whatever reason you need to contact your banker first and put it in writing as well immediately as once your loan goes past 90 days past due it is out of the local banks hands.
Thanks! Well written.
baloney
Also medical insurance rules and charges need to be reviewed. The elderly suffer greatly due to the medical insurance fees.
Medical infation is one of the drivers. However in Cayman medical provider fees that are set in law have not increased for more than a decade..so the main drivwr of medical infation is cost of drugs and cost associated with MRI, PET Scan etc.
I know Doctors Hospital fees have certainly increased in the last 10 years. They’re soon going to price themselves out of business. After paying 15,000 for a simple Op no post-op care is included so if you need just a bandage changed you have to pay extra.
I don’t go there at all if I can help it.
Always get a bill well after the procedure. I want to pay what I owe up front not worry about some bill that will be difficult to pay after the fact.
all you people championing just using the USD outright need to open your eyes to real world. using a next country money makes you a slave to them as they can weaponize it at any point. take a look at the African nations that still uses their old colonial master money. have you not seen have the US froze the USD cash flow to Russia?
Oh boy.
12:35, The reason the U.S. froze the USD cash flow to Russia is because Russia was attempting to be Ukraine’s old colonial master again.
Russia wants to bring back the Russian ruble to Ukraine again.
Which online rabbit hole have you been down and probably misunderstood too?
I am paid in YSD. Deposit those funds with Butterfield (employer also holds their USD there). If I go in to take out USD they want to charge a FX fee!! To access my funds that came from another of their clients.
I understand there’s usually a risk to the financial institution to hold foreign currency, but the rate for USD is fixed!! Money gouging. Comment Mr McWatt?
Don’t get me wrong, all banks in Cayman charge extortionate fees… but if there is one I’ll say is reasonable (to an extent), it’s the fee on withdrawing physical USD.
Banks do have a cost to bring in this money from the US, it’s not free unfortunately…
But I do agree that the fees need to be regulated and brought down across the board. They’re not struggling with profitability!
Bring in USD?! You do know that bars/hotels/restaurants/shops accept USD every day from stay over visitors / cruise passengers and people like me, resident and shopping here.
I do not believe there is a shortfall of USD and they have to bring it in. Even if they did, they make money on the exchange rate spread. No risk to them as it’s fixed.
Our banks often issue brand new crisp US dollar bills, that come from Uncle Sam. Those new ones have to come in, while old weathered notes also go out for cancellation/retirement by Fed.
In the British Virgin Islands & Turks & Caicos they don’t bring it in.
All the tourist sites/ hotels / sailing / boating / diving, etc bring the USD in directly with all the visitors.
PPM again trying to find some relevance for the CI$15,000 monthly they earn off the backs of workers paid CI$1,100 a month.
PPMs 8 years in power set up the mess we now have, all with the help of Mr. Mac and Ms. Julie.
New people needed.
They waited until now to bring this issue up. Gwan wid dat.
Once again PPMs ROY like he been hibernating and just woke up. come on man what did you do when it was your turn at bat? absolutely positively (0). shut ya mouth go away Mama look a 0 de!! BOOOO
CNB charging non CNB customers 2.50 to use their ATM should be criminal but it’s business as usual.
Should it be free?
First of all, it is entirely voluntary as you don’t have to use it.
Second, CNB has to float additional funds to make this cash available, rather than invest it for a return in the money markets. Nothing wrong earning a fee for providing cash to non-CNB customers.
this is exactly why we’re not progressing as a nation. where did the orginal poster say it should be free?
Idiot
Remember decades ago when you put your money in a bank because it was safer there? Remember how they paid you interest, and made you feel appreciated as a customer? Why, you could even keep a minimum balance in a chequing account and not get charged for using your own money!!!
We cannot function — particularly if you have a business — without banks, because we need credit cards and debit cards and the banks know this, and thus they charge for virtually every usage of them. It becomes more and more difficult to operate on a cash basis.
Something radical needs to change, because our banks aren’t doing us any favors. The people at the banks, they’re in the same boat as us. It’s not their fault. It’s the institution that treats us as cattle.
Cayman’s Licensed Class A retail banks are supposed to be fairly and equitably paying their customer for the use of their deposit capital as loan collateral against their wider leveraged portfolio of commerical interests. Post 2008, it’s become tolerable for these banks to pay nearly zero for the use of this capital, even as US overnight bank funding rates (OBFR) rose to 5.32% It’s beyond abusive.
If you put $1000 in a local savings account for a year, when you figure yearly fees, you would have saved money by putting that same amount in a coffee can and burying it in the back yard.
That is a sorry state of affairs. Banks and insurance companies are running roughshod over us all, and we have no recourse. None whatsoever.
Butterfield is currently running a contest to make you use your card more (instead of using cash), thus incurring more fees!
Pretty common in a lot of countries. Why shouldn’t you pay for the convenience of using another banks ATM? You think it’s free to set one up and run it? Your bank charges you fees for your account and it’s part of the service they provide.
nobody have a problem paying. everybody have a problem with price gouging.
OK, so don’t use those that price gouge. Banks are not responsible for the poor planning of non-customers. Why is it so hard to be self-responsible.
Agreed on the KYD USD conversion rate which is massively in favour of the banks. But why don’t we just peg KYD to USD 1 to 1? How did we get .84 and .82? If anyone is expecting CIMA to do anything, you will be very disappointed.
What? Do you realize what you are saying.
Nothing wrong with 1 KYD = 1 USD. All coubtries that adopt Euro go through mechanism for initial conversion of legacy currencies.
Economic suicide
Why? Anon at 3:27pm noted that the Euro countries did this. CI$ is a fixed exchange rate. Why would there be an impact in re-issuing ‘new CI$’ at parity? You’ve failed to articulate any rationale for your hyperbole.
Cost of living goes up 20-25% immediately. Salaries won’t increase for most of those earning CI$, so many people get poorer immediately. No government that wants to stay in power (which is every government everywhere) does this.
25% raise
11:50, Yeah, what I am saying is that the banks are making a big financial killing on the exchange rate. Is that OK with you?
Perhaps someone can explain to me. The British Virgin Islands & the Turks & Caicos both use the U.S. dollar. In Bermuda the Bermuda dollar is 1 to 1 to the U. S. dollar. So why do we not adopt the American dollar or have our currency 1 to 1?
Most of our tourists are American and nearly all our imports are from America.
So why not the U.S. dollar?
You’re asking us to devalue our own currency and the result would be everything would cost more.
No, you retard. The requirement would plainly be to re-issue a new CI$ as part of a transition process.
Now I understand why all the knuckle-draggers and window-lickers on this comment thread are up in arm about re-basing at parity: they assume it would be implemented via a devaluation. FFS!
these are the comments you get when idiots take one economics class in college and think they have the knowledge to fix the world.
Simply put, moving to one for one would mean devaluing the KYD by 16%. Instead of it costing you KYD840.00 to purchase USD1,000 it will cost you KYD1,000. Meaning it will cost merchants 16% more to purchase goods to sell to you. Who do you think will pay for the increase? Is that what you are advocating? Sigh!
6:04, But I don’t get it. If BVI & Turks & Caicos can have the American dollar and the Bermudan dollar is 1 to 1 with the U.S. dollar what do those places know that we don’t know here?
That is not how it would work. Sigh! Does anyone here know how the financial system works? KYD is monopoly money. Everything is ultimately based on what it costs in USD.
1:13, True, monopoly money which allows our banks here to make a nice profit.
You presuppose that “everything” would also immediately change in exact alignment to the currency revaluation, from merchant pricing to salaries.
Oh boy- 16 ups and the math or maths (if you rather) is WRONG. I guess we were trying to match the 16% 🙂
So what do you think all the countries in the European Union did when they converted to the EURO? Short term pain for long term gain.
They are still in pain. The gift that keeps on giving.
poor logic….nothing like that happenned in Europe when Euro was adopted.
You obviously have no idea what happened when countries such as Germany, France, Italy, Latvia, Lithuania, Estonia converted their legacy currencies to the EURO.
You do not understand that everything we buy in the Cayman Islands is based on what it costs in USD.
Why are people downvoting this? The original plan for the Cayman dollar (CI$) was to establish it at parity with the US dollar (USD). This idea was rooted in the desire to simplify transactions and enhance economic stability. However, rather arbitrarily the CI$ was eventually pegged to the USD at a different rate, resulting in the current exchange rate where 1 CI$ equals approximately 1.20 USD. Fixed exchange rates merely unnecessarily increase transaction costs. Obviously there would be a transition period from ‘Old Cayman dollars’ to ‘New Cayman dollars’, but parity conversion would be far better, and would strip the banks’ of the ability to fleece customers by creaming off profits for doing no actual work. Better still would be to actually adopt the US dollar itself.
Advantages of Parity Conversion
– Elimination of Conversion Profits. Setting the CI$ at a 1:1 parity with the USD removes the profits banks make from currency conversion. This could result in fairer pricing for consumers and businesses, as the hidden costs associated with currency exchange are eliminated.
– Maintaining Monetary Sovereignty. Retaining the CI$ at parity with the USD allows the Cayman Islands to maintain some level of monetary sovereignty. The Central Bank could still influence the local economy through limited monetary policy tools, providing a balance between stability and control.
– Gradual Transition. Establishing parity could serve as a gradual step towards potential full dollarisation in the future, allowing the economy and financial systems to adjust progressively, minimizing potential shocks.
Advantages of Dollarisation
– Economic Stability. Adopting the USD could enhance economic stability by aligning with the world’s primary reserve currency. This reduces exchange rate volatility, which benefits businesses and investors by providing a predictable environment for transactions and long-term planning.
– Attracting Investment. The use of USD could make the Cayman Islands more attractive to foreign investors. Familiarity with the USD reduces transaction costs and currency risks, encouraging more foreign direct investment, which can drive economic growth and development.
– Lower Interest Rates. Countries that have dollarised often experience lower interest rates due to the perceived stability of the USD. This can lower the cost of borrowing for businesses and consumers, fostering economic activity and expansion.
– Simplified Financial Transactions. Using the USD simplifies financial transactions for both residents and tourists. It eliminates the need for currency exchange, which can be a hassle and an additional cost. This ease of use can boost tourism and spending.
See also:
https://cpsi.media/p/notes-towards-caribbean-dollarization
https://ibw21.org/news/caribbean-urged-to-adopt-us-dollar/
https://www.centralbank.org.bb/news/working-papers/official-dollarisation-a-realistic-option-for-caricom
https://barbadostoday.bb/2024/03/08/former-central-bank-governor-advocates-full-adoption-of-us-dollar/
https://barbadosunderground.net/2019/07/13/worrell-recommends-dollarization/
10:16, Thank you for your excellent analysis. So enlightening.
The advantages of either parity conversion or dollarisation seem very strong for Caymanians and visitors.
The only losers would seem to be the big Canadian banks and a couple of others. Sure they would survive either action if it was taken.
The Cayman Islands government needs to instruct Class A bank licencees to modernise their post-Covid touchless payment infrastructure at merchant point of sale. Our banks (a universe of really just BNTB and CNB) are still forcing their clients to use large unreliable electronic bricks spooling-off thermal paper receipts. Making these old machines wireless, doesn’t make them contemporary equivalents to the rest of the world. The licensed credit card operators should also be instructed to adopt Apple pay/Google/Android device compatibility, and an entire universe of missing retirement savings products.
Butterfield has google pay but Apple has no interest in rolling their product out to the Caribbean.
the Bank of Bilking is the king of ridiculous fees.
100% waffle.. full of populist soundbites. mortgage rates are out of our control…and banks will do everything possible to avoid forecloure. so no news here.
bank fees like everything else in cayman is a government protected rip-off scam.
None of the licensed Class A retail banks in the Cayman Islands are owned domestically.
Expect zero change from banks or insurance companies. Daylight robbery all round. But hey, screw the little people right?
Why are we paying banks to use our money to in turn make money. We are literally paying the banks to bank with them.
Alot more needs to be done, the banks here wont even accept money from Paypal, this place is ludacris and you have to wonder who is playing the fiddle in wonderland.
LTD da Unboozler
These are not new issues, which have gone unaddressed for years, and kicking the can down the road is not a viable solution. However, it could have been addressed far sooner.
The Cayman Islands Law Reform Commission (“LRC”) has already addressed some of these (and related) issues including, inter alia, the following:
(1) “The Enforcement of Mortgage-type Security Over Real Estate: Is Reform of the Law Necessary?” (dated 23 November 2019, LRC: Discussion Paper);
(2) “Registered Land (Amendment) Bill 2020” (an LRC Consultation Draft dated 28 August 2020) — which concerns, inter alia, affecting provisions impacting Charges and provides for Lending and Pre-Action Protocol; and
(3) “Usury: The Common Law and Statutory Position in the Cayman Islands” (dated 1 November 2021, LRC: Discussion Paper) — which includes a “Usury (Common Law Abrogation) Bill 2021” (an LRC Draft dated 11 January 2021) that is aimed at primarily abrogating common law usury that LRC’s research revealed is extant in Cayman law.
Please note the dates of the forgoing documents.
A few last questions as food for thought are as follows:
(1) Why is it that, despite having been identified by the Financial Action Task Force and the Department of Commerce and Investment is the regulator, the law concerning (non-bank, whether licensed or not) moneylenders are not addressed and enforced satisfactorily? Secured moneylending is a function that banks also carry out, but it’s not only banks that are actively involved in this commercial activity.
(2) Is there no concern that, with respect to certain Practice Directions that allow for extra-judicial (i.e., without having to get court approval) before enforcing Charges securing loans (similar to what many would call, albeit inaccurately, “mortgage enforcement”), at least in certain scenarios, this might allow for money laundering offences (contravening, inter alia, the Proceeds of Crime Act) to fly under the radar unnoticed?
(3) Has Parliament (including the DPP, Attorney General and the other two arms of government) turned a blind eye of connivance to, inter alia, criminality, illegality and/or consumer protection abuse for an extended period?
Just asking some questions.
One can see that The Law Reform Commissioners have put in a lot of effort on these matters. Cabinet however has not acted on their reports.
They need to reign in these banks as one bank says you must use the ATM machine to make deposits but when you have rolls of coins the machine can not take them. So if you go to the counter the teller wants to charge you to make the coin deposit into your savings account. They are just being crooked and pure greedy.Some of these tellers seem like the enjoy sticking it to the customers.
And when you bring in a cheque (ie, a negotiable instrument, signed by the payor and instructing the bank to make payment to a payee named on the cheque) that is drawn on that very bank, they will not honor it and cash unless the payee pays a huge fee (usually 0.5% or $50). What the heck. Charge the make of the cheque, not the payee.
They don’t honour any cheques any longer unless the Payee is also customer. So in other words they issue cheque books but won’t cash the same cheques .
so, if you don’t pay, the bank should foot the cost? have the government be the charity not a private company…once again, if you don’t like the fees, don’t bank with them. I don’t buy Versace because I can’t afford it, I shop at Ross…
you’re under a severe delusion if you think there is a wide variety in banks to go to.
And what are the other options?
crpto
have you ever tried to offramp to a local bank? You still need fiat for everyday expenses. Bank will not knowingly let you deposit your earnings from crypto.
smoke and mirrors from the Progressives again. Anyway, more importantly wheres the motion to regulate landlords and bring protection to Cayman’s renters
They passed the law in 2009 I think, just haven’t enacted it.
less red tape the better for everyone.
…said the landlord.
How about consumer protection laws generally? We are decades behind the rest of the world whilst we get ripped off by poor service.
Especially how insirance companies screw claimants and clients alike.
Why can’t we have the option of just insuring the vulnerable parts of our homes like roofs or flood insurance?
I’m not concerned about my cement block walls.
Isn’t the stamp duty imposed by government? We should take that away. A lot of places won’t take cash overseas so to use your debit card to buy a bottle of water and get charged .20c every time is ridiculous.
Wrong, it’s 0.25c govt stamp duty per debit card transaction.
per any transaction. still watching people debt card a $1 coffee at supermarket with apparently no idea theyre paying 0.30c + 0.25cto Butterfield and Govt….clueless
Use CC not DC when overseas. Problem solved. (If you’re able to travel you’re able to qualify for a credit card.)
Maybe just maybe they should limit the massive spread on the conversion between KYD & USD.
This is a massive risk-free profit engine for the banks.
One thing we should do which would be a massive pain in the neck and I’m not even sure how it would work…although I’m sure it’s possible…is to change the peg rate to 1:1.
It doesn’t make any sense that any time you go between two pegged currencies that the consumer loses one to three cents on the dollar. Do that math over your lifetime and all your earnings and expenses and imports etc and it really adds up.
What about the people who get paid in CI
I don’t know the details exactly, but there would have to be a date after which point everything would “shift”.
So if you have $100 CI in the bank prior, on the new date it would change to $122 CI/USD.
And if you make $10/hr CI prior, on the new date it would go to $12.2 CI/USD.
You’d probably need to issue a “new CI” so that existing cash in circulation doesn’t lose it’s value.
I’m sure it’s very complicated but worth it when you consider we lose 2 cents on the dollar each way over your entire life that’s crazy.
Don’t forget too all the hotels, CUC, grocery stores etc that are sending millions overseas for imports and lose that 2%; that loss is reflected in our costs of living.
trued paying your CUC bill in USD?
Reading comprehension not your strong point – after the proposed conversion date they would be the same. Been to the Bahamas or BVI? When the currency bus the same value no issue for the merchants in accepting it.
There is a crystallisation record date and time when the exchange is made, after that, it’s parity. No new currency printing needed, no foreign bank profiteering. Get paid in either, but after that date, you’ll likely prefer the USD.
This is a great idea. what is the justification for this exchange rate difference anyways? It is charged by CIMA when banks exchange usd/kyd there?
Is the same for every currency. The difference is the spread. The banks make money between the buy rate & sale rate. Make both .83
Why can businesses choose what exchange rate they use? Shouldn’t all car machines automatically do the conversion at the Bank’s rate? Shouldn’t businesses need a banking license if they’re also in the business of exchanging currencies?
world wide establishments decide their exchange rate. they are doing you a favour by taking foreign currency
This. ALT seems to believe they are authorised and licensed by CIMA to charge a different forex rate depending on type of USD Credit card used..this is theft.