Feature: Cracking the Code – Helping Consumers Understand Finance

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Utilities, mortgages, rent, loans, credit cards – these are just some of the tools we use to facilitate our daily lives; but how many of us truly understand the fees, agreements and penalties which are tied to these services?

One agency, Consumers International, has found that many of us struggle to comprehend the legal and financial language – and implications which are tied to the services we use.??

It was that premise which led to the creation of the Promotion of Consumer Protection in the Caribbean Project, in 2009.?? The project is funded by the Inter-American Development Bank, Consumers International and the governments of the participating countries – Barbados, Jamaica and Trinidad and Tobago – and seeks to strengthen consumer organisations; provide technical assistance in the areas of banking and credit for consumer advocates; and increase the range of available public information.

Between today and tomorrow, CI (Caribbean) will be hosting its final workshop for the project at the Amaryllis Beach Resort, Hastings.?? It will focus on the Legal Framework for Financial Services, Consumer Protection and Consumer Loan Agreements: Consumer Rights and Responsibilities.?? Representatives from the

Ministry of Commerce and Trade and its regional counterparts will tackle issues critical to achieving the project’s objectives, one of which is the introduction of a Voluntary Banking Code in the three countries.??

This code will serve as a standard agreement between consumer agencies and banks to ensure transparency in the financial markets and offerings, and as a tool for consumers and financial institutions to interact, fostering greater understanding among banking clients.??

Minister of Commerce and Trade, Haynesley Benn, addressed this element of understanding and consumer education today at the workshop.?? He asserted that "financial institutions are obligated to ensure that their clients are not over-indebted. They should offer transparent and responsibly priced products and use appropriate collection practices where necessary. Provision should also be made for their clients to make complaints and have these resolved in a timely manner."

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Senator, Haynesley Benn, Minister of Commerce and Trade. (FP)??

Senator Benn underscored that a lack of transparency on the part of institutions, combined with a consumer’s lack of knowledge with regard to certain processes – such as how billing fees are determined or interest calculated – could spell disaster for the client. He advised that both the companies and consumers had to acknowledge their responsibilities.

The Commerce Minister pointed out that consumers should seek information, analyse the costs and benefits of financial products and comply with the ascribed terms and conditions.?? He added, however, that a more finance-savvy public did not eliminate the need for consumer bodies.

"…In Barbados, we have a consumer body and I have expressed a need [for it to] be strengthened, not only in terms of numbers.?? There are so many issues that we need to address," he said, suggesting that they should not only be concerned with the prices of goods, but also with the quality on offer.?? He added that consumer bodies should be the ones to challenge institutions, both private and public, about their policies and lobby for change.

CI Caribbean Project Coordinator, Candice Ramessar, offered Jamaica as an example where this change was taking place.?? She noted that a Facebook campaign on financial literacy, which was used to engage more than 900 young people, had created meaningful dialogue and produced ideas on how best to present financial information.??

She revealed that "…we have done an enormous amount of work with the Central Bank [in Jamaica] and we’re hoping that process will be replicated in the two other countries. We have started in Trinidad and Tobago and we’re presently trying to procure a legal consultant to start that process in Barbados," she explained, adding that they hoped the process would be completed by early September this year.??

Public education campaigns will be launched in the three countries, Ms. Ramessar said, with emphasis being placed on reaching women, youth and those who reside in rural areas.

At this week’s workshop, the focus will be on the second component of the project.?? The Project Coordinator told the audience that "…we hired a consultant… [who] looked at the financial services contracts for mortgages, credit card agreements…and what she has done is to code those depending on how well they comply with the

regulations in the three countries; but, in addition to that, we have looked at how those credit card agreements differ from what the banks do in other countries.

"We have transnational banks…and those banks operate in jurisdictions outside of the Caribbean and, in most cases, what we have found, is that their conduct here in the Caribbean differs significantly from their conduct [in their home country]…in a case where we have international banks operating in the region and they already have set standards in the places that they come from, the question then becomes ???why?? are they not applying those standards they are familiar with in the country of operation?’" she queried.

Expanding on the workshop’s activities, Ms. Ramessar said participants would examine the financial contracts to determine "how they differ, if they contravene the regulations in the three countries and then we will talk about what we will do… how do we engage and interact with the banks in terms of presenting that information and advocating for change."

nekaelia.hutchinson@barbados.gov.bb

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