Regional FSC suggested to improve CARICOM

A senior Barbadian politician is suggesting that it would serve CARICOM well to establish a regional body that would regulate the insurance and financial sectors, especially given the cross border capital flows that are commonplace within those sectors.

Leader of the Opposition Barbados Labour Party, attorney-at-law Mia Mottley, made the call while delivering the feature address at the 41st annual awards presentation and banquet of the Barbados Association of Insurance and Financial Advisors (BARIFA) recently at The Crane Resort, which if adopted could see the closure of the existing national financial services commissions across the region.

Mottley is adamant that it makes no sense for each member state of CARICOM to have its own financial services commission (FSC), and not be able to attract the best staff and provide timely regulations to the insurance and financial entities which they are charged to supervise.

“Governments have a responsibility particularly after the bitter pill of CLICO and British American, where there are still families who continue to await what will be their outcome five years later; families some of whom have lost these major investors to death and yet there is no certainty as to how and when they would receive back their investment. It is a trying circumstance, but what it has taught us is that the individual pursuit of regulation cannot be in the best interest of the Caribbean, especially since we are signatory to a CARICOM Single Market and Economy,” she said.

Mottley, a former Attorney General of Barbados, is suggesting that a regional financial services commission can operate much like the Caribbean Court of Justice (CCJ), such that it would have national and regional jurisdictions. She said the FSC could sit as a regional entity with an overview of the companies that move across the region, as this was one of the weaknesses in the regulation of the CLICO and British American.

“But equally that regional financial services commission can sit as the financial services commission of Barbados, or Trinidad and Tobago, or Jamaica, or the OECS and that is what we did when we created the Caribbean Court of Justice. We created a single entity, with the same judges and depending on what is before them, they sit either as a Caribbean Court of Justice which is the interpretative body for the regional treaty, the Treaty of Chaguaramas or they sit as the final court of appeal of Guyana, the final court of appeal of Barbados, the final court of appeal of Belize or the final court of appeal soon to be of Dominica,” Mottley said.

She continued, “Same people, same building, same support staff – economies of scale. CLICO and British American showed us that our very weakness was in the management of cross border flows.”

The attorney-at-law reflecting on the situation which saw the collapse of the two insurance companies, said that efforts were not made to sufficiently ring fence the assets to leave them within the jurisdictions to back the liabilities which the companies had encouraged through the products they had sold such. As such, she said that there were deficits in the statutory fund which should have been a liquid scheme and not a scheme that was “riddled” with illiquid assets that could not meet the demands of their clients when they were needed. (JRT)