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Insurance Brokers want reflection period on mortgages and loans

GREAT BAY – The St. Maarten Insurance Brokers Association has announced they’ll meet Parliament soon to request the body introduce legislation that will give consumers a reflection period of between seven and 14 working days to think over the terms of their mortgage or loan. Siba also wants the banks to issue a one to two page fact sheet with key information like the principal amount being borrowed, the amount of interest that will be paid, the interest rate etc.

The intention to request that the provision be legislated was announced by the association’s President Neil Henderson at a press conference on Tuesday morning. The meeting is not likely to happen until August because Parliament is currently on summer recess. Henderson is already positive that the association will get support for their initiative.

“We have already discussed this matter with the Parliament of the Netherlands Antilles and they have agreed that this was an undesirable situation. We also have people in the Parliament of St. Maarten who clearly understand the issues,” Henderson said.

Henderson said the main goal of the securing the reflection period is so that people will have the chance to consider whether they can afford the mortgage or loan and whether it is the best option in the market. It also has to do with the fact that banks have been compelling customers to buy their insurance from them.

“The SIBA’s main focus naturally remains that of protecting the right of customers in an insurance contract, and we therefore condemn the current practice of tying-in insurance as part of a loan and mortgage agreement,” Henderson said.

Banco di Caribe and RBTT are two banks that engage in “compelling” people to buy their insurance with them according to bank documents provided by the broker’s association.

“Banco di Caribe N.V. shall have brokerage over all insurances regarding this facility to be covered by Ennia,” the documents from that bank states.

“You will lead all your banking transactions and insurances through our bank,” the RBTT documents state.

Siba is not happy about the practice of “compelling” the purchase of insurance that banks are using because it undercuts their ability to do business and in their view does not protect the consumer. Specific pitfalls that the association has identified are that customers pay interest on their insurance premiums when they take the loan from the bank, they lose the right to shop around, local carriers lose business as some banks place their business overseas and cause a flight of capital and the customer is severely disadvantaged when there is a dispute with the bank.

“We want people to understand that they are entering a contract and when there’s a dispute the bank will become the beneficiary, (in some instances) the insurance company, the broker and the one to appoint the adjuster, so all you can do is say a prayer or make sure you have a big bank account so you can pay good lawyers to defend you,” Henderson said.

No Trust

Siba wants the legislation because they do not believe, based on current practices, that the banks are willing to fully explain to consumers all of the risks involved in putting their loan and mortgage together with an insurance policy from the same institution. They paint a picture where banks rush people through the process and that consumers go along with it, because they want to make the transition to owning their own car or owning their own home.

One scenario Henderson used to justify the charge was the un-payable debt of 4.7 billion guilders that the Netherlands Antilles ended up with despite the fact that the government had lawyers and financial experts on the payroll that could defend it against the commercial banks they were borrowing from.

“This debt by the way was predominantly facilitated by the same commercial banks knowing that the people would have to repay same with their blood sweat and tears for generations to come. As the islands are settling in with their respective choice of constitutional status, we expect desperate attempts by these commercial banks to further box people into loan and mortgage agreements with conditions aimed at; interest, fees, hidden fees, balloon fees, late fees, pre-paid penalty fees, using the ATM fees, standing in line fees, using the internet fees, credit card fees, closing fees, back end fees, and new fees as they please,” Henderson said.

Some of the current practices that leads Siba to believe the banks won’t change the way they do business is that a bank that they did not name has come to the islands and granted mortgages in euro that people had to refinance or end up defaulting on and leading to foreclosure, that bank have been giving the impression that people will have paid their mortgage by age 60, only for them to find out they still owe 350, 000 guilders and what they call the “big mess evolving in Curacao, because of the perception that a bank may want to influence the Presidency of the Central Bank. Other instances cited by the association are the fact that banks have not been transparent and it has become the order of the day that banks enforce directives from their head-office that are not necessary compliant with the country’s legal system, while  forcing consumers into a little box by having them sign waivers.


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