In our post-financial crisis world, there is a much bigger onus on banks to prioritize responsibility and accountability. This extends to financial institutions’ (FIs’) internal checks and compliance methods, but should it also apply to customer relations and helping people to manage their money?
One thing that’s clear is that banks are in a unique position to help consumers take a sensible and efficient approach to their finances.
The Association of Banks in Singapore (ABS) recently announced the Debt Consolidation Plan (DCP), a repayment scheme designed to help borrowers reduce their debts over time. Fourteen FIs have committed to the plan, including American Express International, ANZ, Bank of China and Standard Chartered Bank.
Customers who meet eligibility criteria – including annual earnings between S$20,000 (US$14,000) and S$120,000, and net personal assets of less than S$2 million – can consolidate their existing unsecured credit across lenders with just one participating FI.
The main aim of the DCP is to prepare consumers for changes in Singapore’s industry-wide borrowing limit. The cap will fall from 24 times monthly income to 18 times in June 2017 and 12 times in June 2019.
ABS director Ong-Ang Ai Boon said: “The ABS’ Debt Consolidation Plan is an industry effort that aims to provide flexibility to both borrowers and lenders. We encourage customers who are eligible for the plan to take early action to reduce their debts.”
This is one example of how the banking industry is helping customers to take control of their financial affairs.
Last year, Toronto-Dominion Bank launched the TD MySpend app, a mobile tool designed to help people track their spending. It uses a traffic light system to show users if they are spending more or less than usual in categories like dining out, entertainment and travel.
As important as industry-wide initiatives and regulatory reforms are, it could be the smallest changes in consumer habits that help to prevent another debt crisis.