Published On:Tuesday, June 29, 2010

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas is "failing to successfully launch" its new international financial services products, a senior attorney and QC has warned, adding that this nation needs to "compress" the product development/legislative reform cycle to remain competitive.

Brian Moree, senior partner at McKinney, Bancroft & Hughes, told a Bahamas Association of Compliance Officers (BACO) luncheon that this nation was frequently launching products up to six years after key international financial centre competitors had introduced them, and when market trends and demands from high net worth individuals and their families had "moved on to the next product".

Given the innovative and dynamic nature of the global financial services business, Mr Moree argued that legislation vital to the development of new Bahamian products should not have to wait "in the queue" to be drafted, particularly given the industry's position as the second largest sector in the Bahamian economy.

Renewing his call for dedicated Parliamentary draftsmen to be assigned specifically to crafting financial services legislation, Mr Moree said it was "an extremely difficult and time consuming process to pass legislation" under the current structure, where all government legal work went through the Attorney General's Office.

This meant financial services-related Bills had to compete with work from all other government agencies and departments for the attention of parliamentary draftsmen, slowing product development and associated legislative reform.

"If we are going to compete, we need to be able to respond much more quickly to the market forces around us," Mr Moree said. "The path to legislative reform in the Bahamas is simply too long. The path to product development is simply too long. By the time we develop things, other jurisdictions have had them for three, four, five years, and are moving on to the next product."

Lacing his presentation with examples, Mr Moree picked out private trust companies (PTCs), a product that gave high-net worth settlors and their families more control over how their assets were managed and invested, and tied into the establishment of family offices.

"This was a big, big product four to five years ago," he added. "We put our PTC legislation on the books about four years after our competitors had it."

Then there was Segregated Accounts Companies, or Protected Cell legislation, which allowed assets and liabilities to be segregated from another set of the same under a single corporate structure.

"This was a big, big product seven to eight years ago, particularly in shipping and insurance," Mr Moree added. "When we put ours on the books, our competitors had already had them for five to six years."

He likened the situation to a fashion store, pointing out that if its stock and product was outdated, few people would either venture into the store or, if they did, buy from it.

"It's the same thing with international financial centres," Mr Moree told the BACO luncheon. "You can't operate in an international financial centre that is bringing its products in three, four, five years after its competitors, and after it gets the products on the books, wonders why the market is not rushing to us. It's because it has moved on to the next product......

"It's taking us too long to bring it to market, and we don't launch our financial services products successfully in the Bahamas." The senior QC said efforts to sell and market new Bahamian financial services products needed to be sustained and consistent, and take place over a lengthy period such as a year.

New legislation was part of the financial services industry's "bread and butter", and Mr Moree added: "Being part of the second largest industry, I don't think I should have to compete with other departments and agencies to get my Bill drafted.

"It's much easier to get business before it is settled. The key is not to try and dislodge business from competitors, but while those products are hot, we need to put ourselves in a position where business is still circling, deciding where to land.

"We need to be able to compress the cycle for product development and legislative reform. There are a lot of issues that are challenging the Bahamas and international financial centres generally within the context of a global picture. But there are times when you have to look inward and say there are things we can be doing, and should be doing, now."