The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Cabinet Minister said yesterday that creating a single financial services regulator would eliminate significant “overlap” and boost supervisory efficiency, enhancing the Bahamas competitiveness.

Damian Gomez, Minister of State for Legal Affairs, told a Bahamas Institute of Financial Services (BIFS) conference that it may be wise for the Bahamas to consider revising its current regulatory framework and follow the UK, which has a single regulator, the Financial Services Authority.

“The regulators empowered under various Acts to monitor and supervise activities in the domestic financial services sector formed the Group of Financial Sector Regulators (GFSR), whose central purpose is to facilitate information sharing between domestic and foreign financial service regulators. The secondary function of the group is to provide a forum where cross-cutting issues faced by regulators in the domestic financial sector may be discussed,” Mr Gomez said.

“I think that to some extent we can all agree that there is significant overlap of the regulatory responsibility between domestic regulators in the Bahamas. When it comes to adjusting laws and regulations to reflect international best practice in financial services, the issue in the Bahamas from a regulatory perspective seems to be co-ordination.

“This issue was partially addressed in 2002, where members of the GFSR executed a memorandum of understanding which purports to cultivate the harmonisation of regulatory practices in the Bahamas,” Mr Gomez added.

“Indeed, it may be wise to begin to consider revising the current regulatory framework towards a view of consolidation, and adopt an approach similar to the UK which, under its Financial Services Markets Act 2000, empowers a single regulator with extensive regulatory powers over the financial services sector in the United Kingdom.”

Financial services regulatory consolidation has been discussed and mulled for many years, It is a topic that has spanned the three most recent administrations, but with little sign of any decision taken on what the ultimate supervisory structure should look like or how to get there.

The Bahamas has yet to decide, for instance, on whether to follow the model suggested by Mr Gomez or adopt the ‘twin peaks’ approach that would leave the Central Bank of the Bahamas separate and apart from all the other regulators.

Some minimal progress has been made, with the Securities Commission assuming responsibility for the Inspector of Financial and Corporate Services Providers and the Compliance Commission. Yet it has not been formally consolidated with other regulators such as the Insurance Commission, while pending pensions legislation also foresees the creation of a Pensions Commission to regulate that sector.

Mr Gomez, meanwhile, said a single regulator could provide significant advantages in terms of efficiency and competitiveness.

“It is my humble option that no matter what the institutional framework contemplated, the idea of a a single regulatory agency will have significant advantages in terms of efficiency, in terms of regulating the sector and in terms of competitiveness of the Bahamas as a major player in the global financial services sector,” he said.