Bank Fees – By Kisean Joseph
Bank Fees Erode Abandoned
Retired banker Everett Christian said inactivity fees charged by commercial banks quietly shrink dormant account balances long before the funds are ever transferred to the Central Bank.
Christian, speaking on Observer media’s Big Issues, on Sunday, said the practice means the roughly $50 million currently identified as unclaimed within the Eastern Caribbean Central Bank system understates how much money account holders originally had on deposit.
He explained that once an account, whether a savings account, chequing account, fixed deposit, or shareholding, sits untouched for 15 years, banks are legally required to transfer the balance to the Central Bank. But he said the balance transferred is often far smaller than what was originally there.
“What has happened is that the banks levy a service charge for inactivity on the accounts,” Christian said. “And what this does is that it depletes the balance outstanding so that by the time the 15-year period of abandonment – once that period is up and the amount is transferred to the central bank, it’s only a fraction of what was initially the balance due.”
Christian said the practice raises a broader question about fairness, though he stopped short of passing judgment.
“So the question is: is that morally right? No, I’m not going to be the judge here. I’m just throwing that out as to whether that’s something that should be happening,” he said.
He added that the erosion of these balances also complicates the larger debate now underway over whether unclaimed deposits should be used to help fund a proposed regional airline, since the true value of dormant accounts before bank charges may be considerably higher than the figures currently cited.
