Q: Jamaica’s government is planning to create a new financial services consumer protection agency. Finance Minister Audley Shaw said the government is particularly concerned about high fees on dormant bank accounts. How should the agency operate in order to both protect consumers and help financial services providers thrive? Does the country need new regulations in order to protect consumers in the financial sector? What should the government do to ensure new regulations are not burdensome for financial services companies or have unintended consequences?
A: Christopher Simpson, partner at O’Neal Webster in the British Virgin Islands:
“It is important that a balance be struck between the providers of financial services and the consumers of those services. Of course, regulations are necessary and important to protect consumers, but they cannot be so burdensome that service providers are not able to effectively compete, innovate, make profits, and create employment opportunities, all while passing on benefits to consumers in the process. There are clearly some areas that need to be addressed, including the dormant accounts situation. Some banks have already reduced or rolled back their fees on dormant accounts, which suggests that with input from a protection agency or similar body, consumers can benefit.
Financial services providers should be encouraged to identify new solutions to generate income and, at the same time, maintain or grow their general consumer base. Any new regulations should therefore not simply limit the manner in which financial services providers currently operate, but should also put in place avenues for substantive industry growth. These might include allowing new and unique areas of operation, where appropriate, while embracing modern technology. The primary aim of the agency should be to prevent business practices that are anti-competitive, deceptive, or unfair to consumers, while enhancing public understanding of the nature of competitive business without undue burden to the business environment.
The British Virgin Islands is well known for its offshore financial services industry, and over the years it has been able to develop varying levels of regulations for different financial services products to meet the needs of clients, with one notable area being investment funds. It is therefore important for Jamaica, in its implementation of the new agency, to consider and adopt a framework that will be sufficient to protect consumers but will also allow the financial services industry to thrive, bearing in mind that, globally, the industry is already facing increased regulations.”