Parliament votes to take on banks over fees and fairness
(CNS): Financial Services Minister André Ebanks has said the Cayman Islands Monetary Authority will be reviewing the fees retail banks are charging local customers and already has plans to amend the Registered Land Act to make it harder for them to foreclose on homeowners. Accepting a private member’s motion brought by the opposition leader last month, Ebanks ensured its passage and committed the government to consider legislation that would force local banks to adopt a code of conduct based on the UK’s new consumer banking rules
Roy McTaggart’s motion united MPs in their condemnation of how banks have behaved towards customers in recent years and the increased costs of banking fees even as interest rates have soared.
The opposition leader called for banks to voluntarily implement the code of conduct and reduce their fees, and if they refused, for the government to force their hands with legislation. He also asked the UPM administration to deal with the enforcement of mortgage-type security over real estate.
In his response, Ebanks confirmed that the draft amendments to the Registered Lands Act were on the government’s legislative agenda and that the premier would update the House on those changes to the law before the end of the year. He also said that CIMA will be doing a review that he expected to be “very informative”.
In a motion calling for higher standards, more transparency and fairness to customers, McTaggart said interest rates had significantly increased bank profits, but the fees they introduced to counter years of low interest rates had not been reduced. He told parliament that the issues listed in his motion were of crucial public concern, and the conversations that the PACT Government had begun with banks in 2023 had failed to advance.
He pointed out that the autonomy of modern banks is decreasing, and decisions are being made by people who know little or nothing about local customers’ needs. He said it was time now for banks to review the long list of fees they charge for almost every transaction, given the high interest rates that they are now enjoying. He said the 1% fee they charge for simply handling local currency or for accessing US currency “was unacceptable”, noting that cash was still legal tender.
McTaggart said the increase in interest rates was pushing more people into default on their home loans and that the government should implement the Law Reform Commission’s recommendations to address the area of foreclosures to prevent Caymanians from losing their homes due to the massive hike in interest rates over the last two years.
During the debate, MPs spoke about a catalogue of complaints about banks they had received from constituents. Chris Saunders noted that, according to a CIMA report, the banks made a whopping 25.3% return on their equity last year. This is double what CUC shareholders received under an agreement with the government that many see as a gold-plated profit deal.
See McTaggart present his motion and Ebanks’ response on CIGTV below:
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Category: Banking & money, Business, Laws, Politics
I expect no real change in this regard. The politicians will satisfy their CoC friends, colleagues, and bosses and do nothing at our expense. I have heard these complaints for 40 years and am still waiting for something to be done about them…
My bank is flat-out stealing from me, but what can I do? To whom do I complain? They do as they please and get away with it because they know the government does not care anyway and there is no cost to cheating/abusing their customers.
Don’t know who is worse the scammers or the BANK ? Both have the same intent to rob us by any means necessary.
We should be more worried about where the banks are getting all the money from. Anyone gone in and asked to see their savings in the safe? It isn’t there.
One run on any bank here and its game over. If every customer (actually, probably if only 15% of customers) went down to Butterfield right now and demanded to withdraw all their savings, Butterfield would refuse to give them to you. Because they dont have it.
the entire banking system is a fraud. Go in and get a mortage today, and the bank just creates the money with a tap on the screen. They’ve not borrowed it from anyone else. Its completely made up. Magic money.
A total sham of a system. Just get the entire community you live in to walk down to any bank and demand your savings. They do not have them. you will not get them.
tick tock
Hate to break it to you but the ‘scandal’ that you are outlining here is something that is taught to first year economics students – along with basically anyone who is curious about banking and the modern financial system we have developed, you seeming shocked or surprised by this says more about you than anything else
Newsflash – a bank is not a giant room or vault where money is stored in rows, there is not a pile of it behind a sign with your name or anyone else’s name sitting waiting for you to retrieve it after depositing, life is not a cartoon, lots of banking and interactions between commercial banks and clearing banks is digital, even small banks process hundreds if not thousands of transactions an hour whether we are referring to in-person deposits and withdrawals, or online purchases and payments. None of that would be possible if they had to keep 100% of all deposits at all times.
A bank does not keep 100% of the deposits it has taken in at all times they operate under a fractional reserve system that is not a secret or some massive discovery you are making, banks have operated that way basically since the start of modern banking. Also regular everyday people as depositors make up a tiny fraction of the wealth held by the average bank, only tiny banks are in an real risk of collapse based off of the deposits of average consumers, the real risk of a bank run comes into play when larger companies and investors pull huge sums out at once. Part of the overarching agreement that depositors make with banks is that, when they make deposits the bank is allowed to use that deposited money to facilitate other business primarily in loans and investments which is also the same reason why savings accounts accrue interest, in exchange for allowing the bank to take risks with deposits consumers get a small return. That is nothing new.
Another thing taught to first year econ students banks ‘create’ money (more accurately they expand the supply of money) in their normal line of services – that is part of our economic system. Again, that is not a secret, its a pretty basic part of their role.
If for instance a I deposit $10 dollars into a bank, a bank can loan out most of that deposit to another customer under the fractional reserve system. If someone comes to the bank for a loan and the bank gives them 5 dollars (lets assume for this example the bank only has my $10 deposit) the bank has ‘created’ that money as I am still entitled to $10 meanwhile the borrower has $5 for a total of $15 dollars, the 15 dollars is not ‘real’ as in printed and created by a monetary authority, but it is real in terms of its economic effect. That is what banks do on a massive scale, and it is part of what drives our economic system.
I am not an any level saying that our banking system is perfect, or that there is no risk banks still fail, as we saw within the last few years and prominently back during the financial crisis – but you seem to have a fundamental and cartoonish misunderstanding about what a bank is. Modern banking is about balancing the risks that are taken with depositors’ money by the bank as part of the agreement with their customers. We could talk all day about where the line is drawn on that risk and how banks are regulated that is another discussion entirely, but we have a stable if imperfect system designed for the modern day.
If you want to keep 100% of your money at all times you might need to invest in a shovel and find some soft earth, or maybe stuff your mattress or line your walls with it – then again you would then have to then spend the rest of your life guarding that while the rest of us just use the banking system that is older than you and will be here long after you are gone – good luck
The Banks claim the are protecting us from online scammers because they hate competition !
The solution to high bank fees is to boycott the banks and keep your money under your mattress.
The banks are always asking about the source of funds, but my mattress never says a word.
My bank is always saying they have to comply with KYC, but I say how about some KFC instead?
If the police come and ask why you have so much money under your mattress then you sue them and get more money to put under your mattress.
And finally, has anyone ever refused to accept cash for the things that you really want in life?
This is something that I try to explain to my friends, family and whenever I comment here on CNS. We need to understand that a lot of these businesses exploit because they continue to make money. Understandably, trying to run away and not use a bank is quite a difficult thing to do, but the premise is what is important.
Stop giving these people your money! They annoy me with Source of funds, so I told them I’m not explaining anything more than the job letter I provide a bank when I make a transfer. They insisted, so I made other arrangements with other institution and informed them I wanted to closed out my accounts and move my mortgage over. I got a call within 15 minutes about what the bank can overlook and what benefits they can offer me.
I may be but a drop in the pond, but enough drops leaving will dry the pond.
When you start to act like your money and time is valuable, and you become intentional with where you put it, you will realize who is really dependent on who in this society.
And the bank asking where the money comes from….the meagre pension per month that ‘allowed’ from my own money. When it is deposited into the account does it not show the pension provider’s name but not enough, they need to see your pension statement…is that even legal?
Perfect!
Mattress is always pleased to see you, banks are only pleased to see if you have millions with them, then they will lie down with you, otherwise it is a dirty condescending look and never ask a question…security.
If any ever wonders where exactly and who is benefiting from this banking sham look no further than idiotic social media pages of these banks and opulent homes and apartments and vehicles senior management lifestyles the sad part is their strategic minimal charity donations are done for maximum effect to distract from the obscene greed ! Finally doing something about this terrible situation Ppm will get you NO votes from this Banking Mafia as they will direct these very illegal funds to those candidates nefariously whom they either own or doing business with a fact we understand too well here in Cayman.
How about Customs stop charging 0.84 to convert USD to CI? Pot kettle black.
Such irony, which is obviously beyond the Minister – a Code of Conduct for the banks, when they have consistently ignored the need for Parliamentarians to have one!.
Banks are an important source of revenue for Government and if he tries to enforce his own rules on how a bank should run their business they will simply move elsewhere and take their Govt revenue with them.
If what the minister is saying is correct these fees are not approved by the regulatory authority CIMA then how were they allowed to put into place it is obvious it’s the bank themselves who should now be fined and those who were instrumental is this should be terminated and monies give back to customers.
Sure the banks would be as quick to refund monies to customers as they are taking it.
And they wait until now to bring all the changes in? Kiss my fat black ass. None of you are getting my vote.
I’m not sure if the reference to the 25% return on equity is meant to be a bit of deception or just plain stupid. Unless you can strip out all overseas income that banks make vs CUC’s numbers which are 100% local profits, then you can’t compare the two. It might surprise people how much money banks make outside of Cayman.
I agree that the banks could lower fees but as far as adopting the UK’s consumer banking rules I would need to educate myself on that. What works in the UK may not work here and Cayman is a totally different market that is dominated by the Class A commercial banks mainly from Canada.
There is a reason why the Canadian banks did not suffer the same fate as its American counterparts during the last housing crisis.
We know some of this is political posturing but can we please have open and fair dialogue with the banks that have helped grow the local economy and employs many Caymanians.
The Canadian banks that have exited other caribbean islands has not lead to better banking options and service. On the contrary some of the local banks continue to get squeezed by over regulation due to their small economic size.
If one of the big players pulled out here do you really think that is in the best interest of our financial services industry?
Please reach out to the technocrats first before using these tactics so informed decisions can be made in the best interest of all.
You’re ridiculous about criticizing the Canadian banks during the the great financial crisis in 2008 which outperformed global banks during that crisis and Scotiabank actually raising their dividend in a show of strength of their balance sheet stability during that banking and housing crisis.
Why the Canadian banks outperform USA banks and other worldwide banks is because the the big 5 Canadian banks are FAR more conservative and diversified in comparison to the United States substantially higher risk of default under the arrangement of Freddie Mae and Fannie Mae buying loans from larger commercial banks and lenders. Freddie Mac usually buys loans from smaller banks or credit unions. Americans defaulted on their mortgages resulting in Freddie and Fanny crisis along with AIG, Lehman Brothers and Merril Lynch going bust and some bailed out.
On a different issue the monthly and transaction fees charged by RBC Cayman retail banking are utterly ridiculous and grossly incompetent worst service. Nothing like the real RBC retail banking in Canada. Therefore what this Cayman politician in this article is doing is a very positive thing and should have been done a long time ago.
You cant read. The article did not criticize the Canadian banks as it said that they faired better than american banks.
Banks and CUC, followed closely by population reduction is all im voting for. If you aint about rectify these travesties sooner than later, you can never expect a vote for me, my family or my informed and well aware friends. The movement has started and these banks and CUC time for ravishing the public is over. Fosters insane price hikes next on the chopping block.
LTD da Unboozler
Ravishing, you say?
Virtual banks need to be allowed in Cayman. Lower fees and higher interest rates than even could be imagined by local retail banks here. They also have excellent service via phone apps, more than I can say for our local antiquated money grabbing entities. The only retail bank left standing in Cayman if virtual banks were allowed to compete might be CNB simply because of its attached name, but really who are they trying to kid?
And acceptance of Crypto
In reply to your crypto comment do NOT open an account with Etoro! You’ll save a lot of stress and sleepless nights.
Etoro is grossly incompetent customer service and is a nightmare trying to withdrawal your money back to Cayman. Shady despicable company that’s trying to move their customers accounts to unregulated Seychelles (blacklisted jurisdiction) so their customers have no safety regulatory protection. Etoro is blocked by several G8 countries and being sued by regulators such as Australia for their shady dealings. Go elsewhere if you want to buy into crypto currencies!
Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies. So said Groucho Marx.
There’s nothing the banks can do about interest rates. What they can change is EXCHANGE RATES. The Caymanian public is being robbed blind by the completely pointless US/CI exchange mechanism. The official rate is US$1 = CI$0.833, but the banks will only give you CI$0.82, meaning they have pocketed 1.33 cents for doing nothing whatsoever.
Retailers are even worse, often giving us CI$0.8 to the USD, meaning you are losing 3.3% of every dollar you spend.
This is not even the full picture. Other societal costs are imposed through the confusion created (every business has had customers pay US bills in CI and vice versa) and the additonal admin it creates, not to mention that the same money often goes back and forth between CI and US several times from end to end, racking up a pointless loss to the bank each time.
There is no equivalent in Bermuda. The Bermudian dollar is one for one and you can buy a US dollar for 1 Bermudian dollar. (There is a small spread of 0.4% to go from USD to BMD).
The irony is that, as usual, there are ways for the well-heeled to avoid the cost (banks offer preferential rates for large transfers) while the little guy is stuck with the biggest losses.
A good start to fixing this would be to outlaw local vendors making up their own rates. If we could spend KYD/USD without any losses, there would be less need to use banks to exchange money. Retailers should be in the business of selling goods, not changing currencies.
Parliament should also look into the extremely poor services provided by retail banks.
It takes months and months to obtain a final mortgage approval, even with long-standing connections to the islands. Also, try to open a bank account. LOL. It either never happens, or after providing volumes of documentation, a turtle could walk from East End to George Town faster than the bank responds.
Yes those maniacal and greedy and entitled employees who dream up these bank fees needed to be fired which only increase bonuses and privileges for the top management whilst customers loose homes and living from hand to mouth whilst they turn up their noses in their BMW and Mercedes Benz and high end suv and trucks and while they flaunt their lavish vacations on social media our children go without .Its time they be held accountable.But don’t be surprised if the come with their extortion & blackmail employment threat to justify their egregious and greedy scheme to ripoff customers with bullshit transactions fees like they are suffering by providing customers service.in favor of their aloof shareholders interest .
Did you hear about Butterfield’s contest to see who could use their creditcard the most, vs cash?! Thus incurring a heap of fees and costs!!! Who on earth dreams up this stuff?
i agree with these changes…go at um palitarians…
CIG can help the public by opening access to the Credit Union. Pretty soon the Class A cartel would be out of business.
Pass. The more people in there the more fees. The more everything. Keep it as is.
Credit Union needs different management also so they can actually hold onto good staff. I do agree they’re a better option.
CIG does not control the Credit Union, thank God!
Maybe not, but my god, they operate like it.
Yet is supposed to be only for civil servants and their relatives and ‘friends’.
The Credit Union is fast becoming like the banks. Poor service, increasing fees, and new fees are all unjustified. Pretty soon, there will be no alternative.
Making it harder for banks to foreclose sounds like a good idea. The inevitable result will be it’ll make it harder to obtain a mortgage as banks will be less inclined to do so if they get stuck with a non-paying customer and no recourse.
Where can I get 0.84? I get normally 0.82 at the bank.
Shouldn’t CIMA have already been assessing the Bank’s fees for reasonableness?
25c for each and every debit card transaction is outrageous.
Any explanation why Butterfield Bermuda customers earn a higher rate of interest on Fixed USD time deposits compared to Butterfield Cayman customers?
I think that 25cents is the CI Government debit tax, the banks collect it on all debits and forward to the Government.
…plus monthly compliance fee, monthly service fee, government stamp duty….more than any monthly interest. Have an old mattress that needs stuffing!
It costs me over $500 pa to keep my account. I try to use it as little as possible to keep transaction fees down. Note that the government also levy a fee on each transaction. But I live out east and don’t bank with CNB. The ATM fees, are killing me. Totally unfair and disproportionate. ATM transactions between major commercial providers on islands should be FREE. They already make enough money from transaction fees, interest and our money. If their operating costs are ridiculously high, they need to look at their MASSIVE inefficiency…. all of them as useless as the majority of our politicians. Andre YOU look at this please don’t delegate the job to someone else they’re all useless.
I suggest our Parliamentarians adopt a Code of Conduct themselves before requiring one from the banks.As for profits have they taken into account all the licence fees Government receives along with work permit fees.Trying to enforce edicts on how the banks run their business is a slippery slope as they can always move elsewhere. Have they looked at the profits the supermarkets make, with prices rising almost every day?.
Good. It’s about time CIG tackles something of some substance. I don’t know how much success they will have if they can’t even ensure CUC doesn’t continue to maul us – but at least this sounds like an actual attempt to do something.
What about enforcing an exchange rate that all businesses on island have to comply with?
why are wire fees scaled up in price when it is exactly the same amount of work. Proven for example charge $70 to $630 when sending between $10k and $1m. It should be a fixed charge regardless of the amounnt.
It’s no work if the online is filled out properly. It’s called straight through processing.
Bank fees are a rip off!
Banks have been robbing customers for years, maybe this time something will be done about it!
Exchange rate for CI to US is 0.84. They are already making 5% – but then they charge an additional 1%. WHY?
Criminal. CIMA should fine all these banks in the same manner that the SEC and FCA has done in the US and UK.
Not sure where you got 5% from, CI to USD is 0.84, mid rate is 0.8333, or 0.8% spread. Cash costs money, CIMA charges banks 1% for KYD cash, USD has to be flown in from overseas suppliers.
0.84/0.80=1.05 – THATS 5%. Not sure where you got your math skills from…