Lawmakers are urging banks to rethink a planned hike on commissions and charges which are poised to gouge customers, particularly those on lower incomes.
Chair of the House finance committee Angelos Votsis (Diko) said on Monday that MPs will be writing to the banks association, asking it to weigh in on the steep fee increases to be soon charged by Bank of Cyprus.
A similar letter would meantime be addressed to the finance minister, urging him to intervene.
The new Bank of Cyprus charges, which in many cases will double, come into force on January 13. They pertain to such services as processing utility bill payments, cash withdrawals and cheque issuance.
“These are extreme increases, which you might call a poll tax,” Votsis said.
Rather than giving back to people, after having been bailed out in 2013, banks are fleecing their customers, he added.
Whereas he understood Bank of Cyprus’ plan to cut costs by encouraging use of digital platforms, punishing people such as the elderly who are not tech savvy, is not the way to do it.
The charges should remain the same as now, he added.
MPs will give the banks association one week to respond. If the feedback is unsatisfactory, Votsis said, lawmakers would take matters into their own hands.
It’s unclear whether parliament can legislate on the matter, since it would be seen as interfering in the market.
However current legislation does afford the finance minister the authority to force banks to amend their fees.
The law in question is the ‘Comparability of fees related to payment accounts, payment account switching and access to payment accounts Law of 2017’.
Under Section 19, where the Central Bank determines that fees charged by credit institutions for payment services are ‘unreasonable’, it makes a relevant recommendation to the finance minister.
The recommendation factors in various criteria, one of which must be national income levels.
But the law is fuzzy, in that it doesn’t explain what ‘unreasonable’ fees are.
Based on the Central Bank’s guidance, the finance minister may then issue a decree concerning payment services fees. The decree is published in the government gazette, acquiring the force of law.
Greens MP George Perdikis lambasted finance minister Harris Georgiades for ‘going dead silent’ on the issue.
“Since last Wednesday it’s become known that he can issue a decree determining bank fees for depositors and bank customers.
“But he has done nothing, he has said nothing. Perhaps he is focused on his departure from the finance ministry, but our position is that he must assume his responsibilities before he leaves.”
Georgiades is due to leave his post by the end of the year.
In other business on Monday, the house finance committee reached consensus on a bill that would increase the tax exemption rate on health insurance and similar products from the current 16.6 per cent to 20 per cent.
The bill has been drafted and is expected to be tabled soon, so that it takes effect in early 2020, MPs said.