Fines coming
FSC to charge financial institutions for breaches
FINANCE Minister Dr Nigel Clarke has signalled that when the Financial Services Commission (FSC) is set up in its new role to deal with market conduct and consumer protection in the financial sector, one of its features will be charging financial institutions for violating certain standards.
The move is part of separating market conduct and consumer protection functions from the regulation of the financial sector, with the Bank of Jamaica becoming a super regulator of all financial institutions. The new regime “is critically important to your own survival in the industry”, Clarke told leaders of financial institutions who were listening to his presentation at the Jamaica Stock Exchange 18th Regional Investments and Capital Markets Conference on Wednesday.
The proposed new role for the FSC comes amidst the outcry over an alleged 13-year fraud perpetrated at Stocks and Securities Limited (SSL), a securities dealer, but also aims to — once and for all — create a body for consumers who complain about issues in the banking sector.
“We see the cry everyday from the consuming public... we hear about it in terms of bank fees and bank charges, and complaints come from time to time about other sort of infractions in other areas, allegedly. There is a cry for visible market conduct regulation to make sure that practices are ethical and above board, and customers are treated fairly,” Clarke outlined.
“There is a feeling in the society that nobody’s looking out for the individual consumer.
“The nature of the distrust today — and that distrust exists prior to this occasion —...[is] the reason why we have to have a market conduct and consumer protection regulation.”
He said with the new regulations to come the new FSC “will receive complaints, investigate complaints, adjudicate and apply penalties”.
“And we are going to change the regime to have a fixed penalty regime where we don’t have to haul institutions before the court — [which] has huge costs associated with it [and sometimes] it takes three years to resolve [the matter], and by that time the customer has migrated and they leave saying, ‘Jamaica has no justice.’ No, a fixed penalty regime will allow for us to have an enquiry, look into the matter, and if the entity is guilty of an infraction a fine can be imposed right there and then.
“[The] payment of fines by financial services compan[ies] is going to become a feature of our landscape as it is in Australia and New Zealand and in Canada and in United States, and other more developed markets,” Clarke added.
He said the move comes after the issues arising with Stocks and Securities Limited (SSL) provided the opportunity for the Government to fasttrack a number of changes to the regulation of the financial sector that have been on the books for some time.
Just last year the Government indicated to the International Monetary Fund (IMF) in the Article IV Consultations that the legislation to move forward the plans, which is part of creating a super regulator for the sector, was delayed because of “shortages of qualified staff for drafting and reviewing legislation in government institution, and the pandemic”.