The Eastern Caribbean Central Bank (ECCB) has announced it is commissioning an independent audit of Republic Bank (EC) Limited after over 12,000 customers had their accounts improperly debited due to delayed processing of transactions dating back to 2022.
In a strongly-worded statement, the ECCB called the situation “downright unsatisfactory” and stated it has caused hardship and anxiety for approximately 12,112 customers across the Eastern Caribbean.
“As a licensed financial institution, Republic Bank has an obligation to promptly debit the accounts of its customers for point of sale and e-commerce transactions. On this occasion, Republic Bank failed to meet its own standards, the ECCB Code of Conduct and customer expectations,” the statement reads.
The delayed debits are believed to stem from the system conversion after Republic Bank acquired Scotiabank’s operations in 2022. While customers received goods and services, the corresponding charges were not immediately posted to their accounts until April, 2024.
The ECCB said Republic Bank has provided assurances it will offer affected customers payment plan options, reverse any overdraft fees resulting from the delayed postings, waive fees for certain services, and provide statements to verify amounts at no charge.
However, the central bank complained that its current laws do not allow it to compel Republic Bank to reverse the improper debits, except in cases of inaccuracy or fraud. It called for customers to report such instances promptly.
“The ECCB recognizes the lack of consumer protection powers in the current Banking law,” the statement noted, revealing it has already begun working to establish an Office of Financial Conduct and Inclusion after receiving approval in 2023.
While acknowledging Republic Bank’s delayed action is not “statute-barred,” the ECCB directed affected customers to verify the posted transactions, request payment plans if needed, and report any inaccuracies.
“The excessive delay in the posting of these transactions is aggravating but the action taken by Republic Bank is not statute-barred.
Customers who have been impacted by the late debiting of their accounts by Republic Bank are encouraged to do the following:
- Check to ensure transactions posted and the sums debited are accurate;
- Where there are instances of inaccuracies or fraud, these transactions should be reported promptly to Republic Bank for rectification;
- Customers who require time to settle the late debits should immediately advise Republic Bank and request an appropriate time to settle and finalise those arrangements.
The ECCB remains resolute in its mandate to supervise all licensed financial institutions under the Banking Act, 2015 and is committed to ensuring financial stability in the ECCU”, the statement said.
Perhaps most significantly, the ECCB invoked Section 60(7) of the Banking Act to order an independent third-party audit of the situation. Potential further actions will be determined based on the findings.
However, it is important to note that the ECCB does not have jurisdiction in the British Virgin Islands.
Here, the Government of the Virgin Islands and the Finanical Services Commission are looking into the issue.
In a recent statement. Deputy Premier and Minister for Financial Services Lorna Smith, OBE noted the situation where the withdrawals stemmed from the bank’s delayed processing of approved point-of-sale and e-commerce transactions, where customers had already received the goods or services.
“Following public concerns, I met with the Financial Services Commission (FSC), the regulatory body overseeing the bank, to discuss the situation,” said Smith. “The FSC assures us they are working with Republic Bank (BVI) Limited to find solutions.”
Smith stated that affected customers can expect further communication from the bank outlining steps to address the issue. This follows Republic Bank’s May 2nd media release where they committed to working with customers and offered options like payment plans.
“I encourage affected customers to visit the local branch for assistance,” Smith advised.
While the Government does not directly control the bank’s operations, Smith says she understands the community’s concerns. As the Minister responsible for banking, she says she will continue working with the FSC to ensure a swift resolution once finalized.
In a statement earlier this month, Republic Bank confirmed the problem and stated it had been resolved after a “thorough verification exercise” to identify impacted transactions. The bank said it was working on “personalised communication” to affected customers listing the relevant transactions.
Republic Bank said it was prepared to continue working closely with customers, including providing payment plan options, to resolve concerns “in a satisfactory and timely manner.”