The Central Bank of Cyprus (CBC) could next week deliver its recommendations concerning the level of bank commissions and charges to the finance minister with the minister possibly deciding to impose a ceiling on the fees – some say extortionate – charged by lenders for services.
The CBC has been compiling and comparing data on bank fees from here and overseas, and is expected to present its findings to Finance Minister Constantinos Petrides in the coming days.
According to daily Phileleftheros, the minister could then order a cap on the fees charged by banks for certain services.
The CBC’s recommendation to the minister will factor in the potential impact on banks’ balance sheets from the lowering of fees.
The matter came to the fore last November when the Bank of Cyprus announced a hike on its commissions and charges, pertaining to such services as processing utility bill payments, cash withdrawals and cheque issuance.
In several cases, the charges were set to double – prompting some MPs to liken these to a poll tax on low-income people.
At the time the lender said its goal was to cut its costs by incentivising use of its digital platforms – but lawmakers said this was punishing people such as the elderly who are not tech savvy.
The increased fees had been due to come into force on January 13, but Bank of Cyprus eventually shelved its plans following pressure from parliament.
The House ethics committee has held two sessions to discuss the matter, in November last year and February this year. A new discussion is scheduled for March 4.
MPs had also hinted at legislating on the matter to protect bank customers, but it’s unclear whether this is possible as it would be seen as interfering in the market.
But 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 define 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.