Aleem Khan

Con­sumer debt in T&T has in­creased by $6 bil­lion over the past four years. Cen­tral Bank Gov­er­nor Jwala Ram­bar­ran, who ad­dressed the an­nu­al break­fast meet­ing of the Of­fice of the Fi­nan­cial Ser­vices Om­buds­man (OF­SO) at the Cen­tral Bank Au­di­to­ri­um, Port-of-Spain, yes­ter­day, said mort­gages were dri­ving the growth.

"Here in T&T, house­hold use of fi­nan­cial ser­vices has been rapid­ly ris­ing in re­cent years. Con­sumer debt stood at $25 bil­lion in 2013, up from $19 bil­lion in 2009. Mort­gage debt rose still more rapid­ly, from un­der $7 bil­lion in 2009 to over $10 bil­lion in 2013," he said.

"Cred­it cards in ac­tive cir­cu­la­tion are cur­rent­ly run­ning at al­most 200,000 cards, while con­sumer cred­it card debt stands at around $2 bil­lion. At the same time, house­holds have in­creas­ing­ly be­come more re­spon­si­ble for fund­ing their own pen­sions while buy­ing in­sur­ance poli­cies and in­vest­ing in se­cu­ri­ties and mu­tu­al funds. House­holds are al­so heavy users of re­mit­tances which av­er­aged US$100 mil­lion in the past decade."

Re­tail con­sumers op­er­ate in a mar­ket­place where im­bal­ances of pow­er, in­for­ma­tion and re­sources are on the side of fi­nan­cial in­sti­tu­tions, Ram­bar­ran said."At its heart, con­sumer pro­tec­tion seeks to ad­dress this im­bal­ance," he said.How­ev­er, Ram­bar­ran warned his au­di­ence not to be de­lud­ed."Im­proved con­sumer pro­tec­tion and fi­nan­cial lit­er­a­cy can iden­ti­fy pre­ven­ta­tive mea­sures to help avoid some of the worst fi­nan­cial con­sumer abus­es but they are not sil­ver bul­lets to solve all prob­lems in con­sumer fi­nance," he said.

"This rapid growth of house­hold use of fi­nan­cial ser­vices over the past few years has been ac­com­pa­nied by an in­crease in the num­ber of house­holds that have dif­fi­cul­ty in un­der­stand­ing the risks and oblig­a­tions that they as­sumed–or even the full range of choic­es avail­able,"

As promised at the OF­SO's last break­fast meet­ing, Ram­bar­ran said a re­port on up­grad­ing T&T's regime of fi­nan­cial con­sumer pro­tec­tion in line with in­ter­na­tion­al best prac­tice is the ba­sis for a draft pro­posed pol­i­cy doc­u­ment (PPD) on up­grad­ing the regime of fi­nan­cial con­sumer pro­tec­tion.

The re­port was done by David Thomas, a for­mer chair­man of the In­ter­na­tion­al Net­work of Fi­nan­cial Ser­vices Om­buds­man Schemes and for­mer chief om­buds­man of the Fi­nan­cial Om­buds­man Ser­vice in the Unit­ed King­dom.Elab­o­rat­ing on what he con­sid­ered the high­lights of the draft Ram­bar­ran said: "Per­haps the first and most crit­i­cal leg­isla­tive pro­pos­al re­lates to chang­ing the vol­un­tary na­ture of the Fi­nan­cial Ser­vices Om­buds­man regime to one un­der pinned by leg­isla­tive au­thor­i­ty."

He said the new draft will ad­dresss sev­er­al oth­er is­sues now faced in the mar­ket. "Fi­nal­ly, in or­der to de­liv­er on this ex­pand­ed man­date, the OF­SO would need to be bet­ter re­sourced with the skill sets and tal­ent as its ju­ris­dic­tion and work­load grows. The staff com­ple­ment in the Om­buds­man's of­fice are cur­rent­ly sec­ond­ed from, or ap­proved by, the Cen­tral Bank.

"The draft PPD rec­om­mends that once a statu­to­ry Of­fice of the Fi­nan­cial Ser­vices Om­buds­man is es­tab­lished the om­buds­man will have the pow­er to re­cruit, em­ploy and ap­point staff nec­es­sary for the prop­er func­tion­ing of the scheme. The present staff will have the op­tion to choose whether they will re­main with the Cen­tral Bank or they will be trans­ferred to the leg­is­lat­ed OF­SO," Ram­bar­ran said.