Govt senator: Go after those who cause financial institution collapse

Government Senator Ramon Alleyne has called for stronger laws to ensure regulators can swiftly pursue individuals whose fraud or gross negligence contributes to the collapse of financial institutions, arguing that depositors deserve greater protection and accountability.

As the Protection of Depositors Bill went before the Senate on Wednesday, Senator Alleyne said the legislation should go beyond safeguarding deposits and also empower regulators and liquidators to take decisive action against those responsible for financial failures.

He said: “One aspect that I believe we need to consider in legislation of this type is empowering regulators, liquidators, and the like in terms of going after those persons who have committed any degree of fraud or any degree of gross negligence that has resulted in the failing of the institution.”

Senator Alleyne argued that when financial institutions fail, the losses are deeply personal for ordinary Barbadians who may have spent decades building their savings:

“It strikes people at their core where they have lost substantial savings or substantial investments and they can see persons who they believe to be partially responsible walking the streets, seemingly with no need to answer or account for what they have done and the pain and suffering they have caused.”

Many people struggle to accept situations where loved ones suffered financially while those perceived to have contributed to institutional failures appear to escape consequences, he added.

“The average Barbadian wants to know… when you know that your mother, your grandmother died in debt, not being taken care of, where she had slaved and saved and invested for years, and then individuals who we think or assume may have played a part in that go scot-free, it is offensive.”

He maintained that legislation should provide regulators with the authority needed to intervene before institutions deteriorate beyond recovery:

“This type of legislation has to embolden and give the necessary safeguards to the regulators to make that an easy process.”

Pointing to practices in other jurisdictions, the government senator suggested that some regulatory systems trigger automatic intervention once key warning thresholds are breached. 

“Where certain thresholds are hit, there’s immediate action. If this threshold is failing in the institution immediately there are sanctions that are visited, and we will clear it up early.”

While acknowledging that his proposal could raise concerns about due process, the attorney argued that protecting depositors should take precedence.

“Where you are dealing with the livelihoods of persons, those best practices need to be sort of compromised. Let’s safeguard and then deal with the best practices after.”

Senator Alleyne also suggested that similar protections should eventually be extended to the insurance industry, noting that many people invest in insurance products with the same expectation of security as they do with bank deposits. The bill seeks to add credit unions to deposit insurance protection up to $25 000.

(SB)