The Cayman Islands Bankers Association has updated the code of conduct for its members. The changes bring modest improvements for local banking customers while aligning Cayman’s banks with UK best practices.
The most notable change is that Cayman’s banks have committed to give a minimum of 30 days’ notice before raising existing fees or introducing new ones.
The move comes following political pressure on banks. In July 2024 a private member’s motion was passed that called for a “higher standard of bank’s duty of fairness to customers”. It specifically called for banks to give 30 days’ notice before increasing interest rates, while also highlighting weaknesses in the then banking code and comparing it unfavourably with UK practices.
The cause was followed by Premier André Ebanks, who also serves as minister for financial services and commerce, who met with the association to pursue the changes.
“We undertook the review and revision to our code of conduct in response to the private member’s motion at the request of the Ministry of Financial Services,” said Amanda Bodden, president of the Cayman Islands Banking Association.
Will it be enough?
The new code doesn’t completely answer all the points in the motion. For example, while there will be a 30-day notice for fee increases, that doesn’t apply to mortgage rate rises.
Most mortgages in the Cayman Islands are linked to the US prime rate, with local banks adjusting rates to respond to any move from the Federal Reserve. Yet at this stage of the cycle, with interest rates in the US currently moving down, a switch to a 30-day notice period would work against Caymanian mortgage holders as it would mean they would wait longer before benefiting from the drop.
The other big shift in the new code is that it moves to an ‘outcome based’ culture. Instead of just listing a set of rules that banks should comply with, it adopts the UK’s Financial Conduct Authority’s ‘consumer duty principles’, which tries to ensure that banking customers get fair outcomes.
Member banks that have subscribed to the new code are: Butterfield Bank (Cayman) Ltd., Cayman National Bank Ltd., CIBC Caribbean, PROVEN Bank, RBC Royal Bank (Cayman) Limited, and Scotiabank & Trust (Cayman) Ltd.
It remains to be seen how the move will be received by banking customers in Cayman, yet Bodden is optimistic. “We are hopeful that this renewed commitment to transparency and providing good outcomes for retail customers will be well received.”