The financial system in the Eastern Caribbean Currency Union (ECCU) comprises of domestic banks, International Financial Services Sector banks, credit unions, insurance companies, national development foundations, development finance institutions , building and loan associations and finance companies.
The regulatory framework of the domestic banking system has two main legislative components. First, there is the ECCB Agreement Act, 1983 and its amendments, which under Article 3 paragraph 2(e) of the ECCB Agreement Act gives the Eastern Caribbean Central Bank the power to “regulate banking business on behalf of and in collaboration with Participating Governments.” Second, there are the Banking Acts of the various territories of the Participating Governments, which govern the regulation of banking business in those territories.
Over the period 1988 to 1992, new banking legislation was enacted in each of the member states. These Acts, collectively referred to as the Uniform Banking Act, were uniform across the currency area, and their adoption facilitated the harmonisation of banking business within the ECCB area. Over the period 2004 to 2006, the Banking Acts in the territories of the Participating Governments were revised and upgraded in relation to the Basel core principles. This harmonised banking legislation has strengthened the legal framework for the conduct of banking business and enhanced the regulatory environment.
The harmonised Banking Acts, The Banking Act 2015, recognise the ECCB as the ECCU’s Central Bank, with primary responsibility for the supervision of domestic banks within the region. The ultimate authority for regulating institutions covered by this Act is jointly vested in the Ministers of Finance of the member territories and the ECCB. The Minister of Finance is normally required to act in consultation with, and on the recommendation of the ECCB with respect to those areas where the Minister of Finance has ultimate responsibility.
All commercial banks and other institutions deemed to be carrying on banking business are required to be licensed under the Banking Act and are regulated by the ECCB. As part of the ongoing supervision, licensed financial institutions are required to submit monthly, quarterly and annual returns to the ECCB. These returns provide essential information to assess the performance of the institutions and the financial system, and to inform policy decisions. In addition, periodic visits are made to the institutions to verify the information submitted, assess the risks faced by the banks and to monitor the business conditions and asset quality of the individual institutions.
The international financial services sector is governed by the Offshore Banking Acts in the respective countries and is primarily the responsibility of the national regulators.
The ECCB provides support and actively monitors developments, primarily in the credit unions and insurance sectors. These sectors are supervised by the relevant government authorities and single regulatory units established within the territories.
Overall, the regulation and supervision of the financial sector in the ECCU is being enhanced with the ultimate objective being the establishment of harmonised laws that are consistent with international best practices and a regulatory and supervisory unit for financial services in each member state.
Local Licensed Financial Institutions
Licensed financial institutions that are incorporated under the laws of a member country or territory of the ECCU. These maybe either locally owned or a foreign-owned subsidiary.
Foreign Financial Institution
Licensed financial institution that is incorporated under the laws of a country outside of the ECCU.
Licensed Financial Holding Company
A holding company of a licensed financial institution licensed under the Banking Act.
Code of Best Practice
1.0 SCOPE
This Code of Best Practice proposes basic guiding principles of good banking practice for all licensed financial institutions operating in the Eastern Caribbean Currency Union (ECCU). The Code seeks to facilitate and strengthen the development and maintenance of mutually beneficial relationships between licensed financial institutions and their customers.
The observance of the Code of Best Practice is contingent on full disclosure by both financial institutions and their customers.
The document is not legally binding. However, financial institutions may adopt the Code of Best Practice, in whole or in part, so far as it is relevant to the type of services that are offered and which are covered under this Code.
2.0 OBJECTIVES
The Code of Best Practice is intended to:
2.1 ensure a fair and consistent approach in customer relations and provide minimum standards for customer care;
2.2 promote full disclosure of information;
2.3 increase customer awareness of their rights and obligations;
2.4 provide for the establishment of complaint resolution procedures, as required under the ECCB Guidelines on Corporate Governance; and
2.5 promote integrity and confidence in the ECCU’s financial system.
3.0 APPLICATION
This Code applies to all licensed financial institutions that provide banking services in the ECCU. The Code applies to all personal customers, including sole traders, partnerships, clubs and other non-profit organisations of licensed financial institutions operating in the ECCU. The Code does not apply to corporate customers. However, financial institutions have the right to expand the application as they see fit.
4.0 BASIC PRINCIPLES OF GOOD BANKING PRACTICE
4.1 Financial institutions in the ECCU should:
4.1.1 Act fairly and reasonably in their dealings with customers by:
4.1.1.1 meeting all the standards in this code in the provision of financial products and services;
4.1.1.2 ensuring that products and services provided adhere to relevant laws and regulations;
4.1.1.3 ensuring secure and reliable banking and payment systems; and
4.1.1.4 considering cases of financial difficulty rationally.
4.1.2 Assist customers in understanding how their financial products and services work by:
4.1.2.1 providing information legibly and in plain English;
4.1.2.2 explaining the financial implications and possible risks of acquiring the product; and
4.1.2.3 helping customers to choose the most appropriate product for their needs.
4.1.3 Be sympathetic when things go wrong and deal expeditiously with errors by:
4.1.3.1 correcting mistakes quickly;
4.1.3.2 handling complaints within a reasonable period of time;
4.1.3.3 cancelling any bank charges that were applied as a result of the bank’s error.
4.2 Customers should:
4.2.1 Co-operate with financial institutions in the provision of personal information to facilitate the conduct of proper due diligence by providing:
4.2.1.1 accurate information within a reasonable time upon request;
4.2.1.2 supporting documentation where necessary.
5.0 DISCLOSURES
5.1 Bank Fees and Charges
Financial institutions in the ECCU should provide customers with details of any charges for the day-to-day operations of their accounts.
5.1.1 Customers should be given, at the start of the business relationship and upon request, details of the day-to-day charges which apply to their particular account.
5.1.2 An up-to-date list of all fees and charges should be publicly displayed in the banking hall and/or on the bank’s website for all customers and prospective customers of a financial institution.
5.1.3 If charges are increased or new charges introduced, customers should be personally informed at least 30 days prior to the change being implemented, for example on monthly/quarterly account statements or otherwise.
5.1.4 Customers should be provided with details of any charges for using automated teller machines (ATM) whenever an ATM card is issued or re-issued.
5.1.5 Information on all ATM transaction charges should be made available to customers either on-screen before they proceed with a transaction or by displays in the ATM. The customer should also be informed of possible transaction charges by the card issuer.
5.1.6 Charges levied for the use of ATMs should be clearly shown on the customer’s account statement.
5.2 Operating an Account
The following represents the minimum obligations of financial institutions for the operation of accounts:
5.2.1 Customers should be informed of the current interest rates and the method of calculating interest on their account before the account is opened. Where applicable, any changes should be disclosed at least 30 days in advance to allow the customer sufficient time to make alternative arrangements, if necessary, before the introduction of the change.
5.2.2 For term deposit accounts, customers should be provided with complete deposit agreements which should, at a minimum, provide details of the method of payment of interest, the treatment of the account at maturity and penalties.
5.2.3 Where appropriate for the type of account, customers should be provided with regular (monthly/quarterly) account statements to assist with the management of their accounts and the review of entries made to the accounts.
5.2.4 Where relevant, all account statements should include, at a minimum:
- the current interest rate;
- the varying rates charged on an outstanding balance, a transferred balance, new borrowings and cash advances;
- minimum monthly payment and payment due date;
- transaction details, including cash advance.
5.2.5 Customers should be informed of the clearing cycle including when funds can be withdrawn after being deposited to an account.
5.2.6 Financial institutions should keep original cheques or copies of transactions on customer accounts, in accordance with the requirements of the anti-money laundering legislation and/or the Evidence Act for the respective territory.
5.2.7 When a customer informs a commercial bank that a cheque book, passbook, ATM card, debit or credit card has been lost or stolen, or that the security of an account may have been compromised in any way, the bank should take immediate steps to prevent illegal usage.
The following represents the minimum obligations of customers with operating accounts at financial institutions:
5.2.8 Customers should inform financial institutions of changes to personal information as soon as possible. Examples of changes in information include changes to name, physical address, mailing address, and contact numbers.
5.2.9 Customers should, within a reasonable time upon receipt, review account statements and alert financial institutions of any discrepancies or irregularities as soon as possible.
5.3 Terms and Conditions of Products and Services
5.3.1 Customers who accept a product or service for the first time should be provided with details of all the relevant terms and conditions of the product or service requested. Customers should be required to sign at least one document, which comprehensively outlines all the terms and conditions relating to the product or service of his/her choice, in agreement or acceptance of these terms and conditions. These terms and conditions should be written in plain language with the use of legal or technical language, only where necessary.
5.3.2 The written terms and conditions should clearly state the customer’s rights and responsibilities in relation to the product or service selected.
5.3.3 Financial institutions should, where necessary, inform customers that they may seek independent legal advice with regard to the terms and conditions being committed to.
5.3.4 Financial institutions reserve the right to change the terms and conditions, where applicable and inform customers accordingly.
5.4 Foreign Exchange Services
Financial institutions should:
5.4.1 Provide customers with a full description of the service, as well as explanations of all foreign exchange transactions charges and publicly display details of exchange rates;
5.4.2 Inform customers of the expected timeframe for the delivery of funds to the beneficiary; and
5.4.3 Inform customers of the original amount received and any charges applied whenever funds are transferred to customers’ accounts from abroad.
5.5 Lending
5.5.1 Financial institutions should adequately assess customers’ ability to repay before increasing overdraft, credit card limits or other borrowings so as not to financially overburden a customer. This assessment should include a review of the customer’s income, financial commitments and creditworthiness.
5.5.2 Financial institutions should provide timely and accurate disclosure of terms, costs, rights and liabilities with regard to loan transactions. Each facility provided should specify at a minimum the repayment terms, total amount of the loan, loan fees, interest rate, collateral, conditions of early repayment and procedures if the customer fails or repeatedly fails to meet his/her obligations under the agreement.
5.6 Advertising and Marketing
5.6.1 In accordance with Section 25 (1) of the Banking Act, financial institutions should ensure that all advertising and promotional material is not misleading.
6.0 PROTECTING CUSTOMER INFORMATION
6.1 Financial institutions should treat customer information as private and confidential (even when they are no longer customers of the bank).
6.2 Financial institutions should not reveal the name, address or details about customer accounts to any third party, except where the information is required by law and/or the customer requests this, in writing.
7.0 COMPLAINT HANDLING PROCEDURES
7.1 Financial institutions should inform prospective customers of the availability of procedures for handling complaints.
7.2 If a customer wishes to make a complaint, the financial institution should provide information on how this can be done and the means of recourse if the customer is not pleased with the outcome.
7.3 Financial institutions should:
7.3.1 send a written acknowledgement, within five (5) working days of receiving a complaint;
7.3.2 write to the customer again, within four (4) weeks, with a final response or to explain the reasons for not providing a response, if more time is required;
7.3.3 send a final response within eight (8) weeks and advise the customer of the procedures for taking the complaint further if he/she is not satisfied with the outcome.
8.0 IMPLEMENTATION OF THE CODE OF BEST PRACTICE
8.1 Financial institutions agree to adopt the Code of Best Practice and inform their customers accordingly through publication on the institution’s website, the use of brochures, flyers and/or any other appropriate media.
8.2 Financial institutions should provide a copy of the standard Code of Best Practice to all bank staff and provide the necessary training to facilitate the implementation of the principles of the Code.