From Central Banking

The Bank of Mauritius should be given the power to regulate interest rate spreads and prevent banks from imposing higher borrowing costs on their customers, according to a report published last week.

The proposal was one of 100 recommendations made by a task force, chaired by the central bank’s chief of legal services, Sonali Sewraj-Reetoo, on the terms and conditions of banking contracts in the Mauritian economy.

In their investigation, the task force identified a “profound resentment” towards banks. It noted the use of “strong” language among customer complaints, and quoted one that described the relationship between the two as “asphyxia of customers by banks”.

Common customer complaints included the lack of transparency surrounding bank fees, the inability to compare products across the sector, and the difficulty involved in switching banks.

In response, the task force has drawn up 100 recommendations across a variety of fields, including financial education, competition in the financial sector and inclusion in the wider economy.

It is calling for the review or abolition of 32 different bank fees, and for the rest to be published in a comparative table – dubbed the BankSmart Window – laying out each bank’s charges for different financial products.

The task force is also urging the Mauritius Bankers Association to issue a glossary of common banking terms, and the Bank of Mauritius to commission a study on how to achieve greater customer mobility.

“All options including a switching service, a common utility platform and portable accounts should be considered and assessed,” the task force said.

Read more at Central Banking