Who Died & Made Banking Risk-less Business?

Managing risk is how financial institutions (FIs) make money. They pay top dollars to teams including strategists, internal analysts, actuaries and brokers who, together, are responsible for identifying, measuring and managing various types of risks including operational risk, liquidity risk, reputation risk, market risk, investment risk and credit risk. By the actions and inactions of governments, they are assisted in their risk management efforts.

In 2008, Minister of Finance Audley Shaw, tabled a Bill to initiate credit reporting in Jamaica. Just four years later, then Minister of Finance and Public Service, Hon. Dr. Peter Phillips was able to grant the first license for the operation of a credit bureau in Jamaica. “I signed the first licence under the Credit Reporting Act…and we hope overtime, that this will help to improve the quality of the loan portfolio of the banks.” These events represented a tremendous stimulus for the financial industry, which at the time, held borrower-related risks as a major factor impacting the interest rates of the day.

The FIs, like the government, expressed optimism about what the credit bureaus would mean for their business.

“We, at Jamaica National Building Society, welcome the establishment of Credit Bureaus,…” “…we believe that this is a step in the right direction; and will benefit micro and small entrepreneurs who want to expand their businesses.” -Earl Samuels, Asst. GM, Group Finance and Mortgage Operations -JNBS via www.jnbs.com/credit-reporting-act-sipp-registry-will-benefit-jamaica

“Our partnership with the bureaus will be fundamental in helping us to further enhance your experience with us through enabling reduced processing time for credit applications. Additionally, with the information from the credit bureaus, we are better able to accurately assess your credit worthiness.” – National Commercial via www.jncb.com/customersupport/creditbureau

“Scotiabank is honored to play a part in the roll-out of credit bureau reporting in Jamaica, a significant development in our local banking industry…The impact of the credit report and credit scoring will evolve as we phase in their use in the various parts of our business … and apply this new tool to the benefit of our customers.” Monique French, Snr. Vice President Credit Risk Management, Scotiabank via http://www.scotiabank.com/jm, October 2013

“What will happen is that it will benefit the consumer because you can easily get your credit score and because of your excellent credit score you are going to be able to negotiate for better rates. It will help the financial institutions also because we will have a place we can go to get credit reports for persons who are seeking credit” Maureen Hayden-Cater, President, First Global Bank  via Jamaica Observer, July 2013

Where are we now? 

According to the Bank of Jamaica’s latest publication of its Quarterly Credit Conditions Survey Report – March 2016,  lenders saw increased demand for personal loans- mainly motor vehicle and mortgage loans. That increase was attributed to lower interest rates and increased promotional activities among the lenders and is expected to continue, due to anticipated increased disposable personal income. The outlook for small businesses was not as optimistic with the blame laid here, at the feet of slow economic performance and apprehension in anticipation of the (May 2016) budget presentation.

Interestingly, despite the swift movement of the Credit Reporting Act through Parliament, to impact the credit conditions in the country, there has been very little information coming out of the BOJ regarding the impact of credit reporting on the demand/supply of credit. If this important aspect of credit and risk management is not a feature of the BOJ’s quarterly reports, can said reports truly be representative of credit conditions in the country? The BOJ is required to make annual reports to the Minister concerning the activities of credit bureaus; three reports should have so far been submitted, why was there no public comment on this from the former minister of finance?

The impact of credit reporting on Jamaicans, so far, is known only by the FIs and those who have had experience with the system.

Consider the following:

1.      Basic loan applications including personal loans, motor vehicle loans and education loans at commercial banks and credit unions are processed within 2-3 weeks. Generally speaking, processing time has not improved since the availability of credit checks.

2.      The credit conditions in the SME sector could also be experiencing demand/supply as a result of the credit reporting system, as the owners of new businesses and existing businesses without a credit history, will be assessed for credit based on their personal credit history. As persons from the informal sector move to become more formalized (evidenced by the increased registration of business names at the Companies Office in 2015) and as the government continues to rely on productivity in this sector to achieve rapid growth, further investigation into this possibility is necessary.

3.      Where interest rate is linked to credit score, the differential is insignificant. As an example, a customer with a credit score at the extreme of the low end would face 12.25% on a motor vehicle loan from Sagicor Bank and 10.25% with an excellent score. At COK Sodality, though the company makes use of credit reporting, the score does not affect the interest rate offered. Is this the rate flexibility promised?

4.      Customers with low credit scores are now more likely to be denied credit from traditional FIs even though similar credit information could have facilitated credit before. This is not because the credit reporting system is being used effectively but due to the failure of FIs to adequately prepare their internal users for the changes. There are credit officers turning down applications/delaying processing (or submission) as they do not know how to interpret credit reports and do not want to risk their success record with their credit adjudicators.

5.      Supporting information is still required to support credit reports. Though FIs are able to see payments made on open loans on a credit report, most FIs still require that customers present current statements from the institutions with which they have open credit, though any such statement is likely to be only as current as the credit report. If a customer has open-loans that he/she declares, that are not being reported to the bureaus, the need for a status report is understood but where this is not the case, why is this still a practice?  Note, a request for a status report/statement for some people requires an in-branch visit and can cost up to J$350.

6.      Faulty information from other FIs is still a big problem. There is one institution in particular that is notorious among FIs for causing frustration among its customers, due to erroneous information being transferred to the bureaus. The fourteen days allowed in the credit reporting regulations, is too long a period for addressing such errors. In two weeks, interest rates can move upwards, a house can be taken off the market, a car sold, a registration deadline far-missed or a life-saving surgery made redundant.

7.       When a customer complaint is rectified by the credit bureau, the institution that was the source of the incomplete/incorrect information, is required to update all bureaus to which they supplied the incorrect information. The credit bureau with which the complaint was lodged, is required to update all users that have pulled that client’s report. The process of communicating the update from the credit bureaus to the users requires attention, as there are loopholes which could result in customers’ applications being processed/examined without the benefit of such updates.

8.      In markets like the USA, credit scores can change based on just a month of activity. Checks made at two local bureaus suggest that their systems would require the assessment of 6 to 12 months of payment behavior for the credit score to change. Is this a reasonable time-frame?

9.      FIs require customers to pay for their use of the credit reports. Scotiabank Jamaica one of the top two banks in the country, requires customers to pay for two (2) credit reports from different bureaus at the point of application. Multiple credit reports are often used to access information from a wider group of lenders but how will this be managed going forward? When there are six credit bureaus, will consumers face the cost of six reports? The cost for a credit report varies across institutions and can cost anywhere between $1400 and $2500. Since the bureaus offer standard pricing to all FIs, the range of prices to  customers suggests that the institutions are not only transferring their cost to customers but have made ‘credit reporting’ an income generating activity!

Who died and made banking risk-less business? Why aren’t FI’s  absorbing the cost of credit checks as a risk management expense!

There is evidence on the ground that  consumers need advocacy within this risk-less financial environment which financial institutions are trying to achieve. Jamaicans by nature are not known to demand better service and systems where they spend their money and this has facilitated the growth of businesses and systems that overcharge and under-serve. While it is widely accepted that FIs fall in this group, there is still an opportunity here for the Government of Jamaica and the institutions charged with handling consumer issues, to review and ensure, that the FIs use of the credit reporting system does not develop with the usual lopsided benefits.

The writing has been on the wall that consumers have been needing attention in this market. Despite a stubborn economy in Jamaica for the last few decades, and despite the continued complaints from FIs, in particular the banking sector, concerning heavy taxation, the sector has managed to achieve levels of growth, outperforming most other local service sectors and even first world banks, in certain aspects of their business.

The growth of the micro-finance sector (including loan sharks) is not to be misunderstood as a mere response to demand from the financially illiterate seeking quick credit. Some of these operations are professionally run and offer the quality of service that would be expected from the institutions turning over billions of dollars in annual profits.

As local FIs seek to establish a risk-less financial industry, the Government of Jamaica, through the Minister of Finance and its relevant branches, must respond with a more diversified approach to its interest in the financial sector; an interest that goes beyond FACTA and adherence to the current set of banking regulations. What is needed now, is attention towards those with the least bargaining power in the financial system, to ensure that the systems established to benefit them, do not result in unintended and silent hardships lost in macro economic data.

Related Blog: Guaranteed Standards for the Banking Sector?

C. Clarke |Help Mi Consulting

 

 

 

My Worst Customer Experiences of 2015

My Worst Customer Experiences of 2015

The reasons for poor customer service are many but generally stem from poor leadership, poor human resource management, poor marketing management and reasons external to company. These will be explored in a subsequent blog dedicated to customer experience management.

Jamaican companies need to awake to the fact that customer service is not about front office engagements, customer service must now be understood as the complete set of engagements with a customer or prospective customer, irrespective of where the engagement takes place, which level of company representative undertakes the engagement and whether or not the engagement shows any possibility of being converted into monetary value for the business.

Despite the popularity of social applications such as Periscope, Twitter and Facebook which allow customers and potential customers to share their interactions with companies in real time, legislation which support consumers’ rights to fair treatment and agencies to initiate and impose consumer redress, my own experiences and stories shared, suggest that Jamaican businesses are not phased.

Below is a compilation of those organizations that, based on my own experiences and observations, could benefit from a structured customer experience audit.

CoK Sodality Cooperative Credit Union

  • The Cross Roads location operates a Paymaster bill payment agency which closes earlier than the branch; there is no indication inside our outside the branch to inform customers of this. It means, the Paymaster could close while a customer is waiting in line to be served. I raised this in February 2015; it was still the case in December 2015.
  • I send an urgent fax to the number listed for the Cross Roads branch on the company’s website and immediately called to confirm receipt. That fax number was unknown to the switchboard operators and to the branch representatives. I reported this formally in February 2015 yet that number 929-4028 is still present on the website as at January 4, 2016.

Scotiabank Jamaica & Western Union

  • Are money bags no longer a courtesy? On at least three visits to Scotiabank branches in 2015 the Teller had to walk around to other work stations to find a money bag to pack my cash. I initially took this as a simple matter of stock depletion given my afternoon visits but when a Western Union Rep told me they no longer issued money bags I started to think differently. Maybe this is now a trend!

Ps. As a former high school Environmental Club leader, if this is to reduce the plastic in the environment, hooray! If these companies are being cheap, this is not cool, at least forewarn customers so they can make arrangements to properly secure their cash.

National Commercial Bank

  • I watched in branch early 2015 as a gentleman in tradesman-like attire- lightly stained t-shirt and knapsack with things of various shapes bulging, frantic with worry, try to explain to a customer service representative that there were transactions in his passbook that he could not account for as he had not made them.  Why this irritated the CSR I am unsure but she angrily waved the gentleman in the direction of another ‘area’ in the packed bank. The gentleman kept asking for clarity, “Sir, over there with that”. The only thing missing from the exchange was a long nasty hiss of her teeth and “chro baxide!” She relaxed her facial muscles for a second and was ready to hear my issues, I told her I’d wait until she was through dealing with the gentleman. She released a heavy sigh.

KFC Jamaica 

Some KFC managers need to get their act together! If the card machine is down or malfunctioning, signs must be posted at various points inside the establishment. On one occasion, a store manager argued that there was no sign because the machine was “only giving trouble’, in other words, it was not working consistently. Even with other persons joining the discourse to explain to her the inconvenience that could be experienced, she saw no fault with her logic.

Jamaica National Building Society

Around September 2015 my younger sister asked me me to get the closing time of the Jamaica National branch on the UWI Mona Campus. The automated recording at 1-888-991-4065/6 said 6pm so she rushed from her Chemistry lab before the scheduled end-time getting to the branch around 5:30pm only to find the branch had already closed from 5pm! She returned the following day only to learn that the transaction she wanted to carry out could not be done at that branch. Sigh.

Note to JN, the Money Shop vs Branch concept is not yet entrenched cultural knowledge.

Ps.  The discrepancy in the opening hours between the automated system and the brick and mortar signage were reported via Twitter and message acknowledged. As at January 4, 2016, nothing has changed. Sigh.

Ministry of Labour & Social Security, Students’ Loan Bureau & University College of the Caribbean

Implementing a PBX system is a costly undertaking so when it is misused or underutilized businesses don’t get the intended value and expected benefits from the investment. The institutions identified need to review their systems to ensure that all users are subscribed to the applicable features and are managing their access to the system according to plan. For a caller to be transferred to a user that “has not subscribed to the voice recording” or whose “mailbox is full” is unacceptable! Who is carrying out quality checks on these systems and why aren’t such calls rerouted to another number or back to the main switchboard? Get it together for 2016!

Office of the Prime Minister

The national Information portfolio is handled from within the Office of the Prime Minister (OPM). Last year the OPM had to answer to the public regarding what appeared to be deliberate attempts to bar the media from access to the Prime Minister of Japan, Shinzo Abe and David Cameron, the UK Prime Minister during their separate September 2015 visits to Jamaica. Particular pressure came from the Press Association of Jamaica (PAJ) concerning access to the UK Prime Minister as they felt strongly that the visit could have been organized to allow for even a few questions from local journalists and used the momentum to hammer home their long term demands. The matter became quite a media affair – traditional and online- with the Minister with Responsibility for Information, Senator the Hon. Sandrea Falconer, having to defend herself and her team repeatedly before, during and after the visit. See below the first two paragraphs from OPM’s October 4, 2015 press release ‘OPM Clarifies Issue of Questions from Journalists During Official Visit’.

“In response to questions from the media the Office of the Prime Minister uses this opportunity to state the facts concerning the reasons no questions from journalists were entertained following Prime Ministerial Press Statements during the recent Official Visit of the Prime Minister of the United Kingdom, the Right Honourable David Cameron.

During the planning of the Visit by the Prime Minister of the United Kingdom, the Office of the Prime Minister of Jamaica recommended that questions be taken by both Prime Ministers following their Press Statements at the end of the bilateral meeting. It was initially agreed by the representatives of both countries planning the programme for the visit, that given the usual time constraints with such short visits, the Prime Minister of Jamaica would invite and answer one question from the Jamaican media contingent and the Prime Minister of the United Kingdom would invite and answer one question from the UK Media. “

  • ‘By’ and ‘of’ are not synonyms. Did the UK Prime Minister plan his own visit?
  • Using ‘both’ and referencing ‘both Prime Ministers’, when only one has been introduced as a subject is a juvenile error.
  • There was a single bi-lateral meeting with ‘both’ Prime Ministers? No.

This piece of communication read like the continuation of a personal conversation on the issue. Its poor construction would have confused and misled any reader without prior knowledge of the situation. The business of the people must be better represented; this piece was a disservice to the OPM and to the people of Jamaica.

 Digicel

  • I generally give Digicel high marks for what I perceive to be research led & culturally infused marketing: ‘Please Call Me Service’ #win, ‘Please Credit Me’ (CreditU) #win, but the administration behind its latest product DigiLoan, leaves doubts in my mind.

A DigilLoan allows active users to borrow up to J$1800 of phone ‘credit’ which they repay from future top-ups or from credit transferred to their number from another Digicel subscriber. Originally, the repayment of the loan was only from top-ups, i.e. the amount borrowed would be deducted from the value of credit a user put on his phone subsequent to the loan, until the value of the loan is recovered. Just months after the product was launched, Digicel revised the ‘terms and conditions’ to expand the sources from which it could recover the loans; credit received via its CreditU product became fair game for loan repayment. It is believed that the change was implemented to avoid the practice of borrowers circumventing* the repayment by routing their top-ups through third party phones instead of sending the top-up directly to their own number (my math tells me this was not the main reason).

  • Since there is a 30 day period within which the loan can be settled, Digicel should, at least allow for that period to expire before ‘auto-recouping’ OR
  • Allow the customer to decide which of their top-ups within that 30-day period, is to be used to settle the loan.
  • Of the 9 persons I spoke to during my informal survey, all knew of the product, 4 had used it. They all spoke of both the CreditU and DigiLoan as ‘emergency credit’; an opportunity to be able to make a call in situations of personal injury, threat or other discomfort were common sentiments. If in fact these sentiments were also prominently featured in Digicel’s market research, they would have doubled back on consumers by changing the terms of the DigiLoan. In reality, if a user has a loan balance of J$190 and is within their 30 days to repay, but requests and gets a ‘transfer’ of J$50, for an emergency for instance, the transfer would be of no use as they would not have that sum available to them; it would be auto-recouped towards the loan!
  • If principles of banking are to be applied here, the user’s prepaid account and the loan account would be separate. A financial institution could not draw down on your savings to settle your debt unless you are in default or without other ‘acceptable’ reasons. Does writing this into ‘terms and conditions’ make this ‘fair’? Is there work for the Fair Trading Commission here?

FLOW 

Every FLOW customer knows it is always a real pain trying to reach FLOW’s customer care by phone. On Twitter, there is a chance you may get a response if your Twitter following is large enough. By email, you may receive a confirmation email which directs you to make contact by phone. By Live Chat, you are not likely to get to the point of chatting to an agent if you cannot figure what information to input in the mandatory ‘service no.’ field. At a glance one would believe it is the customer/ account number that they want, but no, their system assumes that despite the company selling various individual services, every person who wishes to use the Chat feature is a landline customer. Yes, what the mandatory ‘service no.’ field actually wants is your FLOW telephone number. Sigh. So, if you are not a FLOW landline customer, get over their glitch by inputting their own phone number 620-2200.

Who is responsible for testing customer engagement systems prior to public use?

Ps. The LiveChat issue remains as at January 4, 2016.

Dispute Resolution Foundation

One would think this organization would be staffed with the most composed set of people, but no. Having called several numbers available on the main page of their website for several days without answer, I decided to send an email. The email went unanswered so I called the Ministry of Justice and someone assisted with an additional number. The phone rang numerous rounds before someone finally picked up. I asked about the lengthy delay in answering, the male attendant went silent, I asked to speak to someone else who might care that I had been trying to reach them for over two weeks without an answer, he transferred me to another male who went on to have me understand that because his desk is far away from the phone and it is not his duty to answer the phone, he could not accept fault. I then asked for the person who could accept fault and was transferred to a female to whom I again had to recount my experiences. She expressed shock at the conduct and nonchalance of her co-workers, apologized on their behalf and went on to provide very useful information to satisfy my query. Sigh.

Ps. There is still no response to the email, no one took my name or email address and so would not thereafter know I had already gotten attention by phone.

CVM Television

CVM has a few good programs within the mix –Live @7 and Football GPS being two, but production continues to be very poor. A foreigner watching for a 2hr period would find at least two reasons to ask if the channel is brand new – late start of programs,  ‘jump start’ of programs –incorrect inserts et al, it does not translate well to viewers. Can we also get some more effort, creativity and originality from the news writers? Why are we getting 30 second story introductions only to hear the inserts begin with a verbatim introduction? That is lazy business CVM, get it together. I have noted some improvements in recent times but there is still a lot left to be done to compete respectably, irrespective of the strategic direction.

Small Business Woes

There is a new worker at my favorite wholesale who does not listen and says “Wi don’t have any.” to requests for things she is unfamiliar with, without checking, I have all the faith the manager will identify those weaknesses and send her to the packing room in short order. Sigh.

Commendations Among It All

While I have highlighted some of the bad of 2015, I must give hearty cheers to those who provided positive and fulfilling customer engagements during the year.

  • The Information Units at the Planning Institute of Jamaica (PIOJ), Ministry of Finance and Planning and the Child Development Agency (CDA)
  • Very special big-up to the proprietors of Kushite Vegetable Cuisine! Follow-up and follow through, #win. They sent me information requested within minutes, sent sms to confirm email sent and followed up days later for feedback. A micro business doing it right!

That’s right, two bullet points. Bad customer experiences create more lasting impressions; they stand out as customers do not accept poor service as the norm.

I expect better from the Jamaican business community in 2016.

C.E Clarke for Help Mi Consulting (c) 2015

A Few Micro-level Concerns Heading into 2016

Just last week Bloomberg.com published a piece highlighting credible performance from the Jamaica Stock Exchange, as it outperformed all other stock markets across the globe (It’s Jammin’: Jamaica’s Tiny Stock Market Conquers World in 2015). I read the article and imagined the Minister of Finance and Planning, Dr. the Honourable Peter Phillips, MP, celebrating over his drink of choice for a second week in a row, having just the week before received a passing grade from the International Monetary Fund (IMF) following the 10th review under the four year Extended Fund Facility.

It dawned on me that Dr. Phillips has had what many would call a successful year!

Continue reading “A Few Micro-level Concerns Heading into 2016”

Self-tipping During the Merry Season

Every now and then I try to break my lunch routine and take a two minute walMs Birdie Crackersk down to a black run wholesale to get a fresh bun and cheese, raisin bread and cheese or Ms. Birdie crackers and cheese, which I generally have with a Lucozade or a Malta.

Recently I ran into an acquaintance on my way there and we began talking about the snail paced service and the high staff turnover that was evident at the location. I  pointed out that there was a female cashier who seemed to be doing well as she had been there at least since early 2015. He was very familiar with the employee and to my surprise, suggested that she was only getting along with the boss as she had taken a different approach to stealing. He said other workers stole from the company but she stole directly from the customers; instead of taking from what she collected for the company, she took her cut from the change to be issued to the customers!

I laughed loudly as it made perfect sense! I could easily recall that on more than just a few occasions, I had to go back to her for change in coins ranging from 15 to 40 dollars! With the bosses’ numbers reconciling well and with no knowledge of what was happening, this employee had managed to position herself as the ideal.

Cashier positions are very low on the salary scale across industries – minimum wage usually. While there are very honest minimum wage earners, there are others who will risk reputation, employment and freedom to get more.

As the merry season nears its peak, shoppers are expected to spend more to get gifts, update their households and to prepare festive meals. With possible extra income from a bonus, money from abroad or from a special loan, it is quite easy for the fancy of the season and the psychological effects of being temporarily better off, to distract from change checking.

Tip if you will but don’t get tipped; it may be more than just coins and it will matter come January.

C. E. Clarke for help Mi Consulting

 

The Minimum Wage Debate (Tax Credit for Individual Employers)

If the announced timeline is kept, Chairman of the Minimum Wage Advisory Commission, Silvera Castro, should any minute now, be presenting to the Hon. Derrick Kellier the Minister of Labour, recommendations concerning the national minimum wage and the minimum wage to security guards.

Since January 2014, the national minimum wage has stood at $5600 and $8,198.80 for industrial security guards for a 40 hour work week. The Planning Institute of Jamaica (PIOJ) has proposed a 13.3% increase while the Jamaica Security Guard Association believes there is justification for an increase of 30%.

Continue reading “The Minimum Wage Debate (Tax Credit for Individual Employers)”

How You Can Remain Productive During Forced Downtime

Over the life of a business forced downtime will be inevitable. No amount of investment in infrastructure, security systems, back-up energy and other controls can guarantee uninterrupted service. Electricity outages, system hacks and crashes and internet hang-ups are perhaps the most common causes of forced downtime in Jamaican companies. When these things happen it can be quite frustrating for managers who are faced with missed targets and deadlines, payments for non-productive hours and an overflow of work due to the reversion to manually intensive processes. Employees with less responsibility are more likely to love these days, except where manual variation of processes is possible!

(Pass da big book deh fimi, chro! Mi neebn memba how fi write wid pen, chro!)

Continue reading “How You Can Remain Productive During Forced Downtime”

Employees As Walking Billboards (Away With Tax on Uniforms Please!)

A few years into my first job, financial  frustrations set in. My days before pay day were spent with other low wage earners hanging around town to check ATMs to see if by chance we had been lucky to get paid ‘early’. The day before payday was one of absolute poverty, so much so that there was often unexaggerated uncertainty about whether we had the means to attend work on the actual payday!

When staff become financially vulnerable, irrespective of their lack of high power earning credentials, a poor performing economy, their own bad money management habits or other personal misdoings, fingers get pointed at the employer. It is the employer that they expect to make things right. In these periods every company effort towards change is treated unfairly and irrationally.

Company uniform policy was for me one of those changes that happened smack in a period of great financial difficulties; it upset me greatly.  Why was I being asked to contribute to something I didn’t ask for? Why should staff pay anything when it is the company that would benefit from uniformity of branding and exposure from multiple brand ambassadors?

The torment got worse as I would move around town only to be referenced by the name of the company. (Who would have thought I would ever miss being called browning or slimmaz!).

I had become a walking billboard!

A three/four person strong movement was born out of this change. We began using the daily low temperature of the air conditioner in our work space as an excuse to add cardigans and jackets to our uniform shirts so we could cover the logo. (Trust me, frustrated workers can think of more ways to hurt a company than to help it, staff frustration is never to be ignored or brushed aside)

I gently discussed the co-spend approach with an administrative manager who defended the company’s request for a contribution with the position that the uniform was also clothing which we would otherwise have to buy. (No one would be buying an Oxford shirt with a company’s name on it)

Many years later, I now realize that a tax provision is likely one of the reasons some companies ask that staff make a contribution towards the procurement of uniforms. For whatever reason (perhaps a helter skelter move to fill a budget gap) the GoJ made the uniform benefit taxable in 1995. So, in addition to purchasing uniforms and paying the associated GCT or paying the uniform allowance incrementally, companies would also have to pay a further tax on the benefit. Why is there a need to tax a uniform benefit!

Even TAJ seems confused on the matter as the inserts below provide conflicting information on whether it is just the PAYE 25% that is to be deducted or other deductions as well.

What amount is exempt for Uniform and laundry allowances?

Uniform $5,739, laundry $3,395 pa. In cases where the employer provides uniform for an employee in the exempt category, subtract the exempt amount from the cost of the uniforms/laundry and tax the  difference which is subject to PAYE and all other statutory deductions. 

https://www.jamaicatax.gov.jm/income-tax-faq               28-Sep-15

Where an employee falls in the exempt category and uniform is provided by the employer, the tax on the benefit is as follows:

Cost of uniform to employer:                    $10,000.00

Exempt amount                                         $   5,739.00

Excess amount (benefit to employee)      $   4,261.00

The benefit is now to be taxed as follows: $4,261 x 25% = $1,065.25

https://www.jamaicatax.gov.jm/employer-s-guide#uniformandlaundry                                                 28-Sep-15

There should be no tax on any uniform. As a matter of fact, the provision of staff uniform should not be treated as a benefit but as a necessary business expense. in the case of the ‘special groups’ their gears are needed to facilitate the kind of work they do in much the same way blinds are needed to moderate the sun entering a building. Where other groups are concerned, uniforms are generally branded which for me speaks advertising and promotions. How are those expenses treated in the general course of a business? How is an outdoor sign treated? It attracts general consumption tax then is treated as an expense which is deductible from earnings i.e. it is not affected by PAYE.

Jamaican small businesses have been noticeably trying their hardest for the past 5-6 years to become part of the uniformed, formal and ‘professional’ society. Pastry shops, restaurants, law offices and even some independent contractors now have branded shirts. The culture and commerce ministries should recognize this shift and promote it by making representation to the TAJ on this matter on behalf of the business community. A more professional looking business sector can motivate a more professional mindset which can play a great role in making Jamaica into that business friendly environment we all desire.

Social consciousness must support economic decisions at every level.

The concern for tax administrators is always evasion but the screen-printing, logo stitching and commercial uniform producing sector is formal enough to facilitate audits if necessary.

If we believe that the newly installed tax collection measures -withholding tax and minimum business tax- will yield the expected results, we should begin to look back and reverse/ amend some of the hurtful moves made in the past.

My hope is that GoJ will see it fit to make the necessary changes in the short term and that companies now asking staff to co-spend on uniforms will begin to foot the full bill and use a uniform policy to manage their spend.

C.E. Clarke for Help Mi Consulting |(c) 2015

The Non-voter, Ungrateful Much?

The right for all men and women of adult age to vote has for many centuries been championed as a signal of inclusion, equality and freedom to have a voice in national decision making. When one contemplates the history of voting and the subjugation of previously voiceless groups, the right to vote is a big deal! The evidence is there to show that Universal Adult Suffrage has been an important springboard for the extension of other liberties and privileges to previously oppressed groups including blacks, women and the materially poor.

  The Road to Suffrage Has Been Neither Swift nor Smooth.

In South Africa, white women lobbied for voting rights for decades and achieved this in 1930 (a move documented as being a strategy to strengthen white supremacy). At this time black men of color faced numerous abuses as limited and purpose conflicting political systems were established, amended and withdrawn. It was not until the passing of the South African Constitution of 1993 that Universal Adult Suffrage was realized, ultimately leading to the 1994 election of the great, now departed Nelson Mandela. Still, in 2015 there are people in the world who can have no say in who governs them and how they are to be governed.  In the Islamic Saudi Arabia, women will only have the liberty to vote for the first time this December if there is no further backtracking on the issue.

Continue reading “The Non-voter, Ungrateful Much?”

Jamaica Land of Culture But Does PICA Understand It?

Jamaica Land of Culture But Does PICA Understand It?

For Dancehall DJ Alkaline it’s 123 to get a girl to fall in love with him, it was 123 for me when I entered the Passport Immigration and Citizen Agency (PICA) on Constant Spring Road a few years ago to get a passport for a family member who was a minor at the time.

Anticipating the disorganization and tardiness that is typical of many GoJ institutions, I was at PICA’s office before 6 am, some hours before opening time. Pleasantly surprised I was that I was able to access the premises, that there was a seating system in place to keep the order of arrival and that there were security guards and administrative staff that had rural Jamaica like ‘brought-up-sy’. 

I observed almost in disbelief, a level of professionalism never before witnessed at any GoJ office I had ever visited. This was not a case of one person saving the lot, at every point in the process there was a sense that the workers knew their role and understood that we were customers.

PICA since then has been up inna mi good book, but it fava mi haffi go cross dem out!

Continue reading “Jamaica Land of Culture But Does PICA Understand It?”

Missing in Three Seconds, A Wandering 2 Year Old

I watched 8mm starring Nicholas Cage on TVJ the other night and I’ve been left tormented by the memories. Yes, we are aware of the possibilities of what can happen when someone goes missing but when the outcome of the search is confirmation of death, that must be incredibly hard to handle.

My occasional morning stop to the service station to get my daughter a patty gave me a minor scare this morning. I was about to hand over my cash for the items, looked down and she was not in sight. Knowing well she likes to look for other items to put on my bill I assumed she was on the other side of the aisle, after all, it was no longer than two seconds before that she was by my side as I picked up Pringles and a pack of peanuts. I called out for her, no answer, I peeked by the snack aisle she was not there, mad panic sets in. A store attendant asks if it was the baby in a pink top that I was looking for, he had seen her go through the door.

Lawd a mercy mi haaaat tap!

Continue reading “Missing in Three Seconds, A Wandering 2 Year Old”