I write to express my concern regarding the treatment meted out to customers by financial institutions. Many such institutions including commercial banks, insurance companies, credit unions, the unit trust corporation and other non-bank entities continue to engage in unfair and abusive practices because customers are not aware of their rights and the avenues for redress.

For many customers, engaging with financial institutions has become a bruising experience. Many people are often left with the feeling that they have been taken advantage of or ripped off. The situation is exacerbated by the existence of outdated laws governing financial consumer protection, the absence of a strong supervisory authority, and a relatively low level of financial literacy.

There are many instances of unfair practices and market abuses in TT. Generally, the banks and other financial institutions do not provide customers with fair and transparent information regarding their financial transactions. They also do not fully disclose information on adverse clauses in contracts, especially punitive charges.

Another challenge for consumers is the overall deterioration in the quality of service provided by financial institutions. These include limited access to in-branch service, long queues, excessive waiting time, the absence of efficient 24/7 online support, the refusal of insurance claims and long processing time for payments and fund transfers.

The clearance of a local check can take up to 15 working days in spite of the fact that a new payment system introduced in February 2023 facilitates settlement in T+2 days (trade date plus two days). Opening a bank account is also a nightmare as requests for information go beyond what seems reasonable. Overall, the quality of the customer service in many institutions is poor.

Over time, customers have witnessed a steady increase in fees and charges, as well as the introduction of new charges with no avenue for redress. Of concern is the lack of adequate disclosure and the impact of rising fees on household welfare, especially low-income people. At the same time, the financial institutions have declared significant profits while paying little interest on deposits.

Another issue is that customers are being compelled to conduct business online without the necessary safeguards being put in place. Customers are exposed to many risks including the lack of adequate customer and tech support, fraud, scams and cyberattacks. However, the financial institutions have not taken the appropriate action to ensure the protection of customers’ data and their privacy.

In addition, a legal and regulatory framework for digital finance, which balances the interests of customers vis-à-vis financial institutions, has not been put in place. Finally, customers’ grievances are either ignored or not resolved in a satisfactory manner because of the absence of effective complaint handling and redress mechanisms.

In well-regulated jurisdictions, the rights of consumers are protected by laws, rules and regulations that are consistent with international standards developed by the G20 and the Organization for Economic Co-operation and Development (OECD). Countries are urged to enact comprehensive legislation to regulate the conduct of financial institutions and to protect the rights of financial consumers.

Financial institutions are also required to establish adequate complaint handling and redress mechanisms. The international standards are ultimately aimed at ensuring the fair and responsible treatment of financial consumers, promoting public confidence and trust in financial institutions, increasing financial inclusion and access, and preserving financial stability.

While financial institutions in TT have often made public utterances about their commitment to seeking the interests of their consumers, the reality is much different. Public confidence and trust in financial institutions have been declining. Although there is an Office of the Financial Services Ombudsman, this institution has limited power and has been unable to undertake effective enforcement action against financial institutions.

The Government needs to act swiftly to put in place a robust legal and regulatory framework that is consistent with international standards to protect the interests of financial consumers.

C MELVILLE

Trincity