ECCB and regulation of bank fees

EDITOR: During a recent Country Outreach Mission to SVG, the Governor of the Eastern Caribbean Central Bank (ECCB), Timothy Antoine said that the ECCB does not have the power to regulate bank fees and charges. I am not sure if I agree with him. Indeed, it would be a very strange thing for the regulator of commercial banks to be powerless with respect of an important area of bank activity. This is tantamount to a regulator being devoid of regulatory authority – a preposterous state of affairs.

In Mr. Antoine’s words, the law “does not give the ECCB the ability to challenge, change or approve bank charges.”

I suppose that he was talking about the ECCB Act (Act #25 of 1983). Mr. Antoine might be right in the sense that the law does not contain a specific statement on the ECCB’s role with respect to bank fees and charges. However, I submit that this matter which can be so inimical to the financial welfare of the public must of necessity fall within the ECCB’s regulatory purview. The law could not spell out every element of the ECCB’s regulatory power.

Moreover, in the absence of a specific regulatory mandate with respect to fees, the ECCB can certainly exercise its leverage. For instance, it can use its explicitly stated power with respect to interest rates to promote desirable behaviour.

According to Section 34 of the Act, the ECCB Act can prescribe minimum and maximum interest rates on deposits. If the ECCB in its own deliberate judgment believes that customers are being abused by banks with respect to user fees and charges, it can take action by increasing the minimum interest rates payable by commercial banks to wipe out the pecuniary benefits of non-interest charges.

Naturally, it is also open to the ECCB to seek a specific power with respect to bank fees by legislative amendment.

I hope to see the ECCB taking a more pro-active approach on the regulation of bank fees in the future.

R. T. Luke V. Browne