Thu | Feb 2, 2023

Bolt-era reforms for financial sector

Published:Tuesday | January 24, 2023 | 1:35 AM
Track star Usain Bolt.
Track star Usain Bolt.

The $3-billion alleged fraud that rocked dozens of investors, including retired Jamaican sprinter Usain Bolt, at Stocks & Securities Limited (SSL) has spurred the Government to announce sweeping reforms for the financial sector.

The Government is now taking steps to pursue the unification of prudential supervision and regulation.

Finance and the Public Service Minister Dr Nigel Clarke announced on Monday that the Government will introduce reforms that will give the Bank of Jamaica responsibility for the prudential supervision and regulation of deposit-taking financial institutions such as commercial banks, building societies, merchant banks, and credit unions.

The central bank will also supervise and regulate non-bank financial institutions comprising securities dealers, insurance companies, and pension funds.

He said that a separate regulator for market conduct and consumer protection for the full spectrum of financial services will be established separately.

According to Clarke, the Financial Services Commission will have a new mandate that involves consumer protection supervision for all financial service providers such as deposit-taking institutions, non-bank financial institutions, cambios, and remittance companies.

At a press conference to announce proposed policy changes in the regulatory framework of the financial sector at the Ministry of Foreign Affairs on Monday, Clarke said that the penalty regimes of the Securities Act, the Banking Act, the Insurance Act, and the Pensions Act will be reviewed.

He said that white-collar criminals will face harsher penalties.

“The discrepancy between white-collar crime and other forms of crime must be erased. If you rob depositors or defraud investors, you undermine the financial system and put our way of life at risk, and as such, the Jamaican society wants you to be put away for a long, long time. Fifteen years, perhaps,” Clarke said.

The finance minister said that the Government will make it a requirement for security dealers to publish their financial statements and material events at standards equivalent to public companies on the Jamaica Stock Exchange.

Other changes proposed by Clarke are the tightening of regulations around connected party transactions for security dealers, as well as introducing a fixed-penalty regime that will result in fines for anti-money laundering/combating the financing of terrorism and other breaches. He said that if the fines are not paid dealers would go to court.

The finance minister also divulged that the Government will also tighten regulations around insider trading and ensure that the penalty and sanctions regime is severe and dissuasive.

“The GOJ will tighten regulations in such a manner that ensures that the penalty and sanctions regime against the front-running of clients in capital markets is severe and dissuasive,” he added.