FSC Regulatory Machinery Put to the Test in 2006/07

The regulatory machinery of the Financial Services Commission (FSC) was put to the test during the 2006/2007 fiscal period, as the activities of unregulated investment schemes gained prominence.
As outlined in the Jamaica Deposit Insurance Corporation’s (JDIC) annual report for the period, the FSC, as the regulatory agency with responsibility for the securities and insurance industries, was “forced to deploy its full resources in the enforcement of pertinent regulations”.
Simultaneously with its enforcement activities, the report noted, the FSC launched a major public education campaign aimed at providing full information on the characteristics and risk components of different investment houses, dealers, services and instruments in the regulated and non-regulated markets.
Also during the fiscal year, the FSC was required to give attention to the registration process for pension funds, following the passage of the Pensions (Superannuation Funds and Retirement Schemes) Act and supporting regulations.
The Commission’s work toward the establishment of compensation schemes for insurance, pensions and securities was also advanced, with a working group, comprising the JDIC and FSC representatives, established toward the end of the review period.
Meanwhile, the Financial Regulatory Council, which was established in 2000 to facilitate the coordination of the regulatory activities of safety net players such as the JDIC, the FSC and the Bank of Jamaica, remained active, with particular attention given to information-sharing and fit and proper criteria.
This was in an effort to ensure consistency in regulatory enforcement, thereby minimizing the risk of regulatory arbitrage, while being careful to avoid burdening the system.
“The financial safety net agencies also kept on their respective and collective agendas, the pending full prudential supervision of credit unions by the Bank of Jamaica, and the subsequent introduction to the Deposit Insurance Scheme,” the report said.
The JDIC was created in 1998 by the Government of Jamaica to protect depositors and promote stability and confidence in the country’s financial sector. Its primary goal is to institute and manage a deposit insurance scheme to protect depositors from loss, up to a specified limit.
Chief among the Corporation’s objectives are: to provide the highest level of coverage possible to small depositors; to restore and maintain confidence in deposit-taking institutions and by extension, contribute to the stability and confidence in the nation’s financial sector; and to provide a clearly defined system for dealing with problems, which may arise in insured financial institutions.