Brian Wynter, executive director of the Finincial Services Commission, addressing a media luncheon at the Hilton Kingston hotel, Wednesday. - Junior Dowie/Staff Photographer

John Myers Jr, Business Reporter

The Financial Services Commission has managed to reverse the bleeding suffered by his agency, resulting from its regulation of the pensions industry, according to its executive director, Brian Wynter.

"Licensing fees paid by the new licensees amounted to $119 million, thus enabling full recovery for the pensions industry," Wynter said Wednesday at a media luncheon held at the Hilton hotel in New Kingston.

His comment follows reports that the FSC had bled $120 million in three years, much of which related to monies fronted for its work in the past two years of developing a regulatory framework for the pensions sector.

Its losses last year were $77 million.

Finance Minister Dr. Omar Davies, explaining the losses, said the law did not allow the FSC to collect fees until it had registered the entities to be monitored.

On Wednesday, Wynter said the FSC approved 21 applications for investment managers and 21 administrator applications over the past year, generating fee income of $119 million - or 10 per cent of the $119 billion of funds in management by the applicants.

This $119 billion represents 87 per cent of the total pension fund assets under management.

On that estimate, the combined assets of the pensions sector would top $136 billion.

The FSC head explained that this happened largely because the agency had to absorb the cost involved in reforming and regulating the pensions industry.

Finance Minister, Dr. Omar Davies, in addressing the status of the FSC in his budget presentation last month, said the losses were 'inevitable' because the regulations controlling the pension industry were not yet effected into law.

However, the passage of the regulations in March 2006 to support the Pensions Act of 2004 gave the FSC the power to charge fees to recoup its costs.

In the meantime the Financial Services Commission (FSC) has blamed insufficient information on the delay in processing applications for operating pension plans and superannuating schemes.

According to the executive director, of the 520 applications for registration of superannuation funds and retirement schemes received "only 45 or nine per cent were properly completed, mainly because most superannuation funds have not yet submitted constitutive documents (Trust Deeds and Plan Rules) updated to bring them into compliance with the Act and Regulations."

At the same time the FSC head said it received 1,628 applications for registration of trustees, but only 749 or 46 per cent of that number had been properly completed.

"To date, fit and proper assessments have been completed for 316 trustees, representing 42 per cent (of the number with) properly completed applications," he said. Those are expected to be reviewed and processed by the end of September.

The agency expects to wrap up its review of half the 520 applications and 60 per cent of trustees by yearend.

Wynter said the FSC's review of the 45 applications that were properly completed for superannuation schemes was "progressing in a timely fashion", bearing in mind the technicalities involved.

Those plans which failed to meet the specifications "have been allowed sufficient time to upgrade their constitutive documents in an orderly fashion and the FSC expects to receive most of them within the next few months."

Meantime, the FSC is working closely with trustees and advisors to bring their constitutive documents into compliance.

The FSC also announced plans to strengthen the framework governing issuer registration and prospectus disclosure by introducing new prospectus regulations.

"Draft regulatory provisions have been prepared and circulated for industry comment, Wynter said, pointing out that several public workshops have already been held to solicit feedback.

A new category designated as "accredited investor" — to cater specifically to those "sophisticated or wealthy investors to whom investment products can be sold which do not meet the more stringent issuer registration requirements" — will be captured in the new regulations.

The inclusion appears to offer a window for high-risk investors who have been captivated by the quick returns from currency trading offered by companies like Olint and other high-rolling schemes.

Under the "accredited investor" concept, Wynter noted that "investment products can be flexibly tailored to meet the needs of a more select clientele with the capacity to obtain their own highly skilled professional advice and with sufficient surplus wealth to be able to sustain the loss of their investment."

john.myers@gleanerjm.com