Government strengthens Financial Services’ regulatory environment

Minister in the Ministry of Finance and Economic Affairs Ryan Straughn is urging credit unions to employ stronger governance structures, as he hinted at tightening legislation to ensure these standards are in place among these institutions.

Straughn was introducing the Financial Services Commission (Amendment) Bill and the Financial Services Commission (Miscellaneous, Provision and Validation) Bill in Parliament on Tuesday.

While the latter validates the fee structure the FSC has in place for the entities it regulates, the amendment bill alters the composition of the FSC so it is now able to issue licences and carry out other functions.

Noting that the pieces of legislation created greater certainty in the operation of the FSC, Straughn told his parliamentary colleagues that it was critical to ensure that the right regulatory environment was in place to govern companies in the financial service sector, including credit unions, pension funds, and co-operatives.

Regarding the credit union movement, Straughn said it was important that as it gets larger that officials start to reflect very carefully on how to maintain the principles of the movement while obtaining “a stronger corporate governance stance” by being able to allow independent members to improve the governance of some of the institutions.

“I raise that specific issue because it is important that as we grow, and in the same way we expect any business to grow and to be able to focus on achieving said growth, one must always accept that you don’t always have all of the skills that you may require internally,” he said.

“It is important now that we look very carefully at how we re-orient the structures of the boards of credit unions, notwithstanding their by-laws with respect to membership and how that works, but in order to strengthen what I would say is the architecture, because with each juncture we must always pause and assess how best can we serve the interest certainly of ordinary Barbadians from a regulatory perspective,” said Straughn.

He said it was the intention of Government to see such local institutions grow.

“To see these Barbadian businesses grow, as regulators, we must set the space for that growth and recognise that credit unions can acquire entities too, domestically, regionally or internationally.

“Our regulatory stance has to be supportive of that environment and therefore, we have given as a ministry, firm direction to both the Central Bank and the FSC that as we transition to focusing on how do we use regulations for growth, that we equally strengthen down the line, the corporate governance structures of all of the institutions that they regulate,” said Straughn.

He said this would provide a greater sense of comfort and trust among Barbadians “in not just the management of the institution, but in the members of the board of said institution, that the regulators are actively on top of things and facilitating things”.

Acknowledging that there would always be risks associated with such businesses, he said “We can put a system in place that even if something happens we can resolve it quickly. That is what is critical as we move forward, not just with respect to how we deal with financial institutions, but it spreads across the rest of the economy.

“If we are going to build out the economy and we are going to have an inclusive recovery then where the rubber hits the road with respect to the provision of and access to finance services, it means that as citizens we must be engaged a little more and the government is trying to build out its role with respect to the provision of better financial literacy in the first instance,” said Straughn.

marlonmadden@barbadostoday.bb