Market Conduct and You: Fees and Charges

The Central Bank of Barbados’ recently issued Market Conduct Guideline standardises[1] key aspects of the way that financial institutions interact with their customers, both in terms of what they do and how they communicate about it.

The guideline, which applies to entities the Bank regulates, namely commercial banks and deposit-taking finance companies (hereafter referred to as finance companies), is intended to ensure that Barbadians have a consistent experience regardless of where they do business. 

One of the areas it covers, and which is of interest to many people, is fees and charges. In this article, we’ll break down what it has to say.

Implementing New or Increased Fees

Under the new guideline, if commercial banks and finance companies want to introduce a new fee or increase an existing one, they must first request a non-objection from the Central Bank at least 60 days before they intend to implement it. That request must include a detailed rationale for the new/increased fee, outline how the fee would impact their customers, and include any other supporting documentation. The Central Bank, for its part, will render its decision within 30 days of the request being submitted.

Should the financial institution receive the non-objection, it must then give its customers no less than 30 days’ notice before it goes into effect. 

If a financial institution wants to reduce a fee, however, it does not need to give prior notice.

Differentiating Between Types of Customers when Setting Fees

Commercial banks and finance companies have both individual and business clients, and the latter could include large corporations, small and medium enterprises, and even microbusinesses. Therefore, it stands to reason that the fees they charge would not be one-size fits all. Accordingly, the guideline says that these financial institutions must have clear policies that distinguish between customer segments and that “these policies should reflect the varying needs and transaction volumes of different customer types.”

One exception to this is in the area of cash management services: financial institutions must not charge any customer, regardless of their size, for transactions totalling less than Barbados $10,000 per day. This is intended to benefit small businesses. 

Promoting E-Banking

In an effort to increase financial inclusion and encourage greater use of digital payments, the guidelines make clear that banks and finance companies are not to charge individuals for sending or receiving funds electronically, whether through batch processing or real-time processing (businesses and other organisations may incur a fee or charge based on the terms of their agreements with their individual financial institution).

In addition, they must not limit transfers between accounts a customer has with their institution. That means that if you have multiple accounts at one bank or finance company, you can move as much money between those accounts as you wish as often as you wish. However, banks and finance companies can impose limits on transfers you make from your account at one financial institution to another you have at a different financial institution or from your account to someone else’s account. In those instances, the limit should be clear, and it should be based on security concerns or efforts to prevent fraud. 

Ensuring Transparency 

Finally, in the interest of transparency, banks and finance companies must ensure you have ready access to information about their fees and charges. This includes having them in their physical locations, whether on display or available on request, and ensuring they are easy to find on their websites and social media pages. That information should be clear, concise, and in plain English. 

From establishing a process for implementing new fees that provides adequate notice to ensuring that that customers have ready access to fee-related information, the Central Bank’s new market conduct guideline ensures that Barbadians have more clarity and are able to make more informed decisions.

Download the full guideline to read everything it says about fees and charges and other areas such as opening accounts, account closures, customer complaints, and accessibility for vulnerable groups. 

[1]Several of the activities detailed in the new guideline were already in practice by some financial institutions before its implementation. The guideline now codifies them.