The insurance and financial services sectors are being put on notice that greater oversight is coming through legislation that will focus more on risk-based assessment.
At the same time, Minister in the Ministry of Finance Ryan Straughn has announced that peer-to-peer lending and crowdfunding could soon become the norm in Barbados, as the Government continues to provide an enabling environment for businesses to thrive.
He said while it was important for the Government to ensure proper rules and regulations were in place to thwart the spread of corruption and hold people accountable for their actions, private sector organisations also had a responsibility to do the same.
“This is especially critical as we tackle head-on the issues relating to anti-money laundering/combating the financing of terrorism and the associated challenges in terms of correspondent banking, and considering the challenges currently being faced by Barbados in respect to the recent ruling by the European Union with respect to Barbados’ inclusion on a list of non-cooperative jurisdictions for tax purposes,” said Straughn.
He insisted that governance remained a key priority for the Mia Mottley administration within the public and private sector, adding that appropriate policies must be established and adhered to while mechanisms are implemented to ensure they are followed.
“Where there are breaches, then the relevant consequences must be imposed. It may appear harsh onset, but it is necessary to ensure the eradication of corruption and the untoward business practices,” said Straughn.
He said a “rigorous” regulatory framework was currently being worked on.
“Our goal is the implementation of a rigorous risk-based supervisory framework which can be applied to all financial institutions. This type of supervision has gradually become the dominant approach to the regulatory supervision of financial institutions across the world. It is a comprehensive, formally structured system that assesses risks within the financial system, giving priority to the resolution for those risks,” said Straughn.
He was addressing the official naming ceremony of the Co-operators General Insurance Company Ltd. (CGICL) building in Collymore Rock, St Michal on Wednesday night.
The structure is now named The Patrick E. McDonald Building, in honour of a former Barbados Cooperative and Credit Union League (BCCUL) board member who played a significant role in the establishment of the building. The CGICL is a wholly owned subsidiary of the BCCUL.
Pointing out that the insurance sector had undergone “quite a bit of transformation” over the last few years, Straughn said more changes had to be made to resolve lingering “challenges” relating to the OECD’s base erosion and profit-sharing initiative.
He said the intended regulatory framework was also intended to ensure that customers are not treated unfairly and that there is adequate monitoring to ensure that mechanisms are in place to reduce risk to the financial system.
“I can say to you that I expect greater enhancement with respect to our regulatory framework in the near future. It is being worked through with consultants and senior technical advisors, which will focus more on risk-based assessment and supervision focus on operation efficiency as well as the implementation of more financial technology across the spectrum,” said Straughn.
He explained that the Financial Services Commission (FSC) will be focusing on assessing the degree of risks in the business operation of companies and determining how to reduce the risk as required.
“You will be constantly monitored both for compliance with the rule as well as the approach to risk management. Therefore, the monitoring of entities will be paramount and a failure to comply or manage well will be noted and the necessary action taken to deal with any concerns according to the appropriate legislation,” he said.
“Therefore, the adoption of risk-based supervision facilitates the detection of risk on time, thus allowing you to focus on high risk areas leading to increased transparency as well as accountability and hence, enhancement of the financial performance.”
The economist said companies therefore had a responsibility to ensure effective risk management, through proper risk assessment, training of staff in risk-based supervision and ensuring risk-based supervision standards were achieved and maintained.
Straughn, who was speaking in place of Prime Minister Mottley who was at the function but not in a position to deliver the feature presentation, said the Government remained committed to continuing to provide an enabling environment aimed at supporting businesses and removing impediments that frustrate new and emerging firms.
He also gave the assurance that it was the Government’s intention to enhance how business is conducted, improve the speed at which service is delivered and the way payments are made, while ensuring accountability.
“Our broad objectives are to achieve overall fiscal discipline, proper allocation of resources to priority needs, and the efficient and effective allocation of public services. It cannot be business as usual,” Straughn said.
“Our reputation as a Government and, by extension, our reputation as a country is of utmost importance. Our success and survival depend on the type of reputation we have and this impacts our ability to attract investment, whether foreign or domestic. It is important that we be seen as a politically stable country and free of corruption.”
Highlighting growing customer demand for digital use and increasing lack of customer loyalty to brands, Straughn urged insurance industry officials to increase their use of digital platforms to prosper.
Announcing that the Government would be taking steps to facilitate peer-to-peer lending and crowdfunding for businesses, he pointed out that the regulatory sandbox was a framework that was already in place to assess innovation in such areas.
(marlonmadden@barbadostoday.bb)
