DaviesFINANCE and Planning Minister Dr. Omar Davies tabled a Bill in Parliament this week to establish the Financial Services Commission (FSC), giving wide powers to the new non-bank supervisory body, including the authority to remove any director or manager of prescribed financial institutions.
The powers of the FSC have also been extended to allow for examinations of institutions to be done at least annually, for special audits to be done where necessary, for it to direct managers and boards of directors of institutions to take steps necessary to addressing problems, and for the imposition of penalties on institutions for the benefit of their users or customers.
It will be responsible for the regulation and supervision of entities dealing in securities, collective investments, investment advisors, the insurance industry and pension funds.
According to the Bill, the FSC shall promote the adoption of procedures designed to control and manage risk, for use by the management, boards of directors and trustees of such institutions. It will also be required to promote stability and confidence in the operations of such institutions, public understanding of the operation of the financial institutions, and the modernisation of financial services with a view to the adoption and maintenance of international standards of competence, efficiency and competitiveness.
The FSC has been authorised to examine, at least once a year, the affairs or business of every prescribed financial institution in Jamaica or elsewhere to ensure that the institution is in a sound financial condition, and to report to the Minister of Finance and Planning the results of every such examination.
It has also been empowered to consider applications for licences or registration and grant or refuse to grant such licences or registration, or suspend, cancel or revoke any such licence or registration.
Under the Act, the FSC, which is to assume the responsibilities of the Securities Commission, may summon the auditor or actuary, or any former auditor or actuary of the prescribed financial institution to make enquiries into the operations and financial position of the institution in question.
It may also implement measures to reduce the possibility of an institution being used for such purposes as fraud, theft or money laundering, and submit a report with recommendations to correct any malpractices or deficiencies.
The FSC has been granted the authority at all times to have access to all books, records and documents in the possession or control of any director, manager, officer or employee of any prescribed financial institution. In addition, it may require any director, manager, officer, auditor, former auditor or employee to furnish information or produce books, records or documents relating to the institution's operation.
Where the FSC believes that an institution is engaged in unsound practice, or, has contravened provisions of the law, it may require the institution to take certain steps or to refrain from a particular course of action or restrict the scope of its business.
In addition, it may impose limitations on the acceptance of new business, the granting of credit, the making of investments, dealing in securities or any other activity carried out by the financial institution.
It may also prohibit the institution from soliciting business generally or from persons who are not already investors or policyholders, entering into any other transaction and require the removal of any director or manager.
The Act requires the FSC to keep proper accounts and records in relation to its business, and entitles the Auditor-General to examine its accounts and records.
Persons employed by the FSC are duty bound to regard and deal with as secret and confidential all documents, information and records obtained in the course of their duties relating to the operations of financial institutions, failing which they may be fined a maximum of $3 million and or jailed for up to three years on conviction. On the other hand, persons who obtain any document, record or information relating to the operations of financial institutions may be fined a maximum of $100,000 and or jailed for up to nine months if the document, record or information is disclosed to any other person.
