Commercial banks charging as much as $5 for withdrawals

New fees, which will see local commercial banks charging depositors as much as XCD$5.00 to make withdrawals from their savings accounts have been described as unfair.

Scotia Bank, CIBC FirstCaribbean, the Bank of St Vincent and the Grenadines (BOSVG) and RBTT Financial Group, have recently published {{more}}fees and charges, which indicate that in many cases, depositors will now be charged whenever they withdraw money, whether they do it at the automatic teller machine (ATM) or at a teller.

Over the last week, SEARCHLIGHT was contacted by two depositors, both of whom expressed alarm at the situation.

“…something about this strikes me as unfair. How could they charge you for coming to the teller and still charge you if you go to the machine instead?” one client of CIBC FirstCaribbean, asked in an email.

CIBC FirstCaribbean recently adjusted their account fees and rates, and effective April 10, 2014, holders of regular savings accounts will be charged $3.50 whenever they make an in-branch withdrawal at a teller. Holders of other deposit accounts will pay between $1.50 and $3.00 for over the counter withdrawals, depending on the type of account held. The charge for all withdrawals at the ATM is now $1.50.

Andre Cadogan, CIBC FCIB Branch Retail and Banking Operations manager, told SEARCHLIGHT on Wednesday that the charge for in-branch withdrawals is a deterrent, as there are many alternatives to having to come into the bank.

“Clients can save money by not coming into the bank,” Cadogan said.

Why then, is the bank charging a fee for making a withdrawal at the ATM, SEARCHLIGHT asked.

Cadogan said that fee is to cover the costs associated with setting up and running the ATM facility.

“As with any business, we have to cover our expenses,” he explained.

Cadogan, however, pointed out that clients are not charged a fee for point of sale (POS) transactions, nor when they make bill payments online.

He said CIBC FCIB is aggressively looking for opportunities to expand their merchant services and he recommended that clients make use of their debit cards where possible.

The new charges came into effect at Scotiabank on August 1, 2013, and depending on the type of account held and the number of transactions made in a month, clients could pay between $2.00 and $5.00 to make an in-branch withdrawal and between $1.00 and $5.00 for ATM withdrawals. POS transactions at Scotiabank also do not attract a fee.

According to the published fees and charges of the BOSVG, which became effective on May 1, clients will be charged $2.00 for over the counter withdrawals only if they have an ATM card and the ATM machine is working, but they still choose to go to a teller.

However, Cerlian Russell, senior manager, Business and Operations of the BOSVG, told SEARCHLIGHT that all over the counter withdrawals are still free and the $2.00 fee was published as a deterrent.

Included among the published rates of the BOSVG is a $0.50 per transaction charge for withdrawals at off-site ATMs, with withdrawals at the ATMs at the bank’s branches still being free.

Again, Russell said that while that charge is listed and is supposed to cover the extra costs associated with servicing off site machines, it has not yet been implemented. POS transactions with the BOSVG debit card attract a charge of $1.00.

Russell said while the BOSVG reviewed their fees and have declared them publicly, there were no major changes in the regular areas of use.

Come June 1, clients of RBTT will find themselves, in most cases, paying $3.00 for over the counter withdrawals and $1.00 if they take their money out at the ATM. Exceptions include Young Leaders and senior citizens accounts. POS transactions will cost $1.00.

Another depositor, who contacted SEARCHLIGHT by phone, asked about the role of the banks’ regulator, the East Caribbean Central Bank (ECCB) in this process, and if the banks should just be allowed to impose fees as they see fit.

SEARCHLIGHT contacted the ECCB at their headquarters in St Kitts on Wednesday seeking clarification on their role as regulator of commercial banks, particularly in relation to fees, but up to press time, no response had been received.

A senior banker, however, told SEARCHLIGHT that the ECCB has a code of banking practice, which among other things, speaks to the proper disclosure of banking fees, even though the code is not legally binding. He said this is why all the commercial banks have recently published their rates and are displaying them prominently at their branches.

The Caribbean Association of Banks (CAB), in a statement issued earlier this year, however, said it would be risky to place limits on the rates banks could charge.

“The banks charge fees to recover the costs associated with various products and services and it would be risky to legislate limits or cap these fees in any way. All banks have the right to cover cost and make a return for its shareholders. Limiting the fees would make the regulation or regulator jointly responsible for any losses resulting from the bank not being able to cover its cost in the normal course of business.

“Any regulation which requires full disclosure is likely to be more beneficial than legislating fees in anyway, as the public would then be aware and able to make an informed choice. Allowing market forces to influence what fees are charged and the level of increase is the best regulator in relation to banks who may wish to charge excessive fees,” the statement said.