Anthony Hylton, the Member of Parliament for St Andrew Western, proposed this legislation on Thursday during a session of the Parliament’s Economy and Production Committee, where representatives from the Bank of Jamaica (BOJ) were present.
Hylton’s suggestion followed remarks by Dr. Jide Lewis, Deputy Governor of the BOJ, who reminded the committee that deposit-taking institutions (DTIs) have not charged fees on dormant accounts for nearly three years. This change came as banks adopted technology to better manage these accounts.
Lewis explained that DTIs previously had to use manual processes to manage dormant accounts, which included measures to prevent staff from accessing these accounts and ensuring that all Know Your Customer (KYC) documentation was current. Now, electronic systems alert banks when dormant accounts are accessed by staff, thereby reducing the risk of internal fraud.
While Hylton welcomed these advancements, he argued that the Government and Parliament should establish clear legislative or regulatory frameworks to safeguard these accounts. He emphasized the need for policies to prevent banks from reverting to charging fees for maintaining dormant and inactive accounts.
Banks have legal obligations to implement fraud risk management mechanisms and must immediately notify the supervisor of any events causing financial losses due to fraud.
Lewis
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In response to Hylton’s inquiry about remedies for breaches, Lewis noted that violations of the Banking Services Act would lead to sanctions. Additionally, internal fraud involving staff members prompts actions by both the bank and law enforcement, as it constitutes a criminal offense. Typically, customers’ accounts are fully restored, including any lost interest, with the financial institution bearing the liability.
However, Hylton maintained that civil remedies should complement regulatory and criminal actions. He argued that depositors who can prove financial loss, such as missed investment opportunities due to lack of access to their funds during investigations and legal proceedings, should be able to seek civil compensation.
Hylton questioned whether the current practice of restoring accounts fully also includes compensating customers for damages resulting from criminal or other actions by bank staff. He emphasized that lost opportunities should not be limited to interest but could also include significant damages that depositors might prove they suffered due to the fraud.
In conclusion, Hylton asserted that depositors should have the right to pursue claims against both the bank and its employees for damages in such cases.
