New fin-sec regulatory model set for full implementation in 2025
Deputy Governor of the Bank of Jamaica (BOJ), Wayne Robinson, says legislation for the new ‘twin peaks’ model of the financial system regulation is not expected to land in Parliament before 2025.
The ‘twin peaks’ regulatory model was introduced this year after fraud at Stocks and Securities Limited was discovered. Robinson made the disclosure at a recent central bank press briefing in November.
“We expect that the Government will table in Parliament by 2025. It involves legislative components, the actual regulations, and more. We are working with MOFP (Ministry of Finance and Planning) to finalise submissions to go to the minister and Cabinet. We have looked carefully at the delineation of functions, with the BOJ having prudential responsibility. The New Financial Services Commission (FSC) will be responsible for market conduct and consumer protection,” Robinson outlined.
“The object also is that both peaks are independent and have capacity to execute. Governance, accountability, and funding will be important,” he added. “It will involve a raft of legislative changes, which we are working on.
“We are also looking internally at internal structures, regulatory and staffing requirements. We have onboarded an international consultant who has expertise in this area,” Robinson disclosed. In another two months we are hoping to have information on how the entities will be structured.”
In February 2023, the MOFP announced that the Bank of Jamaica would be given the responsibility of micro-prudential supervision of deposit-taking institutions and non-bank financial institutions and that the FSC would have oversight of market conduct.
The twin peaks regulatory model was to be implemented after legislative changes. The first peak would cover prudential supervision focusing on the health and soundness of financial firms, many of which are financial conglomerates.
The BOJ is expected to have oversight of securities dealers, insurance companies, and pension funds – currently the responsibility of the FSC – enlarging a reporting system which now includes commercial banks, merchant banks, building societies, with credit unions also in train.
The FSC will be given a new mandate to monitor market conduct and enforce and ensure consumer protection in the financial services sector.
BOJ Governor Richard Byles was appointed as chairman of FSC’s board of commissioners and Major Keron Burrell as executive director-designate.
“The twin peaks model and the legislation to come with it are really very important,” Byles said at the briefing. “We must have a more robust framework for consumer protection.”
On the matter of consumer rights, Byles said that the central bank is also working on a new digital eKYC (electronic know your customer) system with the World Bank, which, alongside the twin peaks, should improve consumer protection.
“The twin peaks project is where we are going to build out a market conduct regulator. We need to have the power in law to address these issues. The twin peaks model and the legislation to go with it is very important,” the BOJ head noted.
“In time, we hope to have a strong, new FSC with strong consumer-protection powers and a new eKYC which allows consumers to change their bank in one day. That is what we are working towards,” Byles noted.
He said that digitisation of KYC information is also desirable as it would enable accounts to open within minutes if they change banks.
“It’s that kind of ease and convenience consumers want. We are developing a central depository of eKYC information with the World Bank.”
And speaking on digitisation among financial institutions, the BOJ governor said: “If there are new banks that want to start up and be purely digital, we would be welcoming of them.”