Governor of the Central Bank of Barbados Cleviston Haynes is assuring the public that the financial sector here remains well-regulated and stable.
His assurances came during his quarterly media briefing on Wednesday and in light of recent discussions surrounding governance at a local financial institution and its parent company, and on the heels of reports of missing funds from an investment firm in Jamaica.
In a carefully measured response to questions from journalists regarding the developments, Haynes said it was important to note that regulators were in constant contact with the banking and financial institutions.
Noting that he was aware of the recent concerns “about whether or not we have a handle on entities”, Haynes said the public would not always be privy to all interaction between financial institutions and regulators.
However, while admitting that from time to time governance and risk management structures needed strengthening in some institutions, Haynes gave the assurance that the financial system remained robust and stable.
“Our financial sector generally has been quite stable and quite strong for a long period of time. We are in a situation where we have strong financial institutions. I think one of the advantages, as we have had so long, is having strong financial institutions with strong backing from their parent [companies]. I think that has redound to the benefit of society.
“We as regulators, Central Bank and Financial Services Commission, work with our financial institutions through our ongoing monitoring, to assess whether or not there are any risks that are emerging, and as a matter of course we are then able to say to entities that we think you should correct X, Y or Z,” he explained.
“The public must rest assured that we as regulators, are looking at all the challenges of all of the institutions and all institutions, they have some issue from time-to-time that has to be addressed. Therefore, I think our supervisors here and the supervisors at the FSC [Financial Services Commission] will continue to work with entities to ensure that they exercise appropriate governance because sometimes the governance needs to be enhanced,” he said.
Concerns were raised recently about the governance at CAPITA Financial Services Inc., which is owned by the Barbados Public Workers’ Cooperative Credit Union Limited (BPWCCUL) Group, due to late submission of audited financial statements. The institution was fined a total of $18 000.
In a statement, the Central Bank later acknowledged that along with the Financial Services Commission (FSC), it was working with the BPWCCUL Group to strengthen corporate governance and compliance within the institutions.
Earlier this month, lawyers for sprint sensation Usain Bolt confirmed that just over $12 million was missing from his account with the Jamaica-based money management firm Stocks and Securities Limited (SSL).
While he did not dismiss the possibility of something similar happening here, Haynes suggested that minimising this occurrence should start with the hiring process.
“The truth is that problems can occur in any system and with any institution. The extent to which it happens is a function in part of the systems that entities have in place – the monitoring [and] the role of compliance functions within the entity,” he said.
Acknowledging that not everyone was honest, Haynes said “I think what we always have to try to do is to, in our recruiting, hopefully try to get people with sound moral values who adhere to the same values that we have and therefore won’t be tempted to do something that brings embarrassment to themselves and/or to the institutions that they represent”.
“But behind that, has to be the systems which institutions set up – the checks and balances – that becomes very important. Sometimes you go into organisations, they say they want A B and C and individuals argue ‘I don’t know why they want so much information’ but all of that may be part of the checks and balances that are necessary to ensure that your funds are secured,” he explained.
The Governor opted not to say whether the Central Bank had to penalise any of the institutions it regulates over the past year. However, he stressed the importance of compliance to safeguard stability in the financial system.
“You can be assured that if there are entities that are penalised, it is that we think it is something that is necessary and that maybe just to get you where you need to get. It is not about collecting penalties. Regulators are interested in ensuring there is compliance, there is sound risk management, there is sound governance,” he said.
(MM)
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