Financial Services Bill timely
DEBATE?ON?THE?Financial Services Commission Bill could not have come a moment too soon and should be welcomed in principle as a step in the right direction. Barbados has come a long way since Independence in 1966 when our economy was largely based on agriculture, with sugar as our dominant foreign exchange earner.
Then, we hardly had much in the way of locally based insurance companies and many, if not all, of those companies operating in the island were branch offices of companies established and headquartered elsewhere. So long as the branch returned profits on its local operations, the integrity of the company rested mainly on the regulation or solvency requirements imposed by the laws of the parent country.
Even so, we had a Supervisor of Insurance supported by an Insurance Act, and a Registrar of Cooperatives whose remit it was to look after the regulation of credit unions. The Central Bank assumed regulation of offshore banks and to some extent the international business companies and related entities when the financial services sector began its life in the late 1970s.
Today’s world is vastly different, and the need for efficient regulation of a more all-embracing nature has been evident for sometime now, because of the increasing complexity of modern financial life.
We need look no further than our recent history to remember local financial services companies that went awry in circumstances in which regulation of a particular kind might have alerted one and all before disaster struck. The problems of The Co-operative Bank, Trade Confirmers, BCCI, and Clico tell various tales from all of which we can learn.
The commission is therefore a welcome bipartisan effort and the bill appears to adhere to the old adage that a stitch in time saves nine.
In this regard, we applaud the decision to give the commission the coercive teeth and authority to do its job of protecting the public and enhancing faith in financial investment in our island.
In his speech, Prime Minister Freundel Stuart told us that the legislation targets the non-bank financial intermediaries such as the Office of the Supervisor of Insurance, the Registrar of Cooperatives, and the credit unions, which are now responsible for upwards of a billion dollars of the people’s funds.
We are prepared to accept the Prime Minister’s word on the aims of the legislation, but we also lament that the long awaited Pensions Act is now overdue. A Bill was drafted and circulated sometime ago, but nothing else seems to have transpired, and it might make a lot of sense if along with better regulation, a modern framework for the management of pension funds was also placed on the statute book, since protection of workers’ pensions during vulnerable retirement years is also very necessary.
We hope that this Bill represents the first in a raft of modern financial regulatory legislation aimed at building confidence in our financial sector. If we are to encourage local investment, then unbridled capitalism cannot be the order of the day. Appropriate regulation is necessary.