Expenses up and income down at FSC for 2015/16

Senior staff reporter

Friday, July 06, 2018

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The Financial Services Commission (FSC) says it recorded a drop of $87.29 million in its total comprehensive income for the 2015/16 financial year, moving from $245.81 million to $158.5 million.

In its annual report for the year ended March 31, 2016, which was laid before Parliament on Tuesday, the FSC said the decline in its performance was influenced mainly by additional expenses, which leapt from $142.6 million to $808 million.

The commission attributed this primarily to increase in costs of $102.7 million, $14.3 million and $14.07 million related to staff, training, and bad debt, respectively.

The FSC outlined that there were increases in salaries, wages and related emoluments which were approved by the Ministry of Finance and the Public Service for the period.

Compensation packages for executive management and commissioners amounted to $107.38 million, an increase of $13.38 million or 14.23 per cent more than in the previous year.

“The increase in emoluments was attributed chiefly to the retroactive payment of gratuity to the executive director for the year 2014/15,” the commission noted.

At the same time the report pointed out that the FSC's income increased by $55.3 million to $93.55 million, mainly because additional fees ($45.9 million) were earned in line with the growth in the assets of the combined regulated industries.

The FSC, which regulates and supervises licencees in the insurance, securities, and pension industries, said it remained solvent with net assets increasing to $917.77 million at the end of March 2016, over $744.10 million at the end of the previous financial year.

The commission also noted in its report that the outlook remained favourable for the three industries which it regulates, all of which remained solvent during 2015/16. It outlined that the combined number of registrants in the insurance industry had as of March 2016 moved to 3,383, from 3,249 in the previous financial year, with life and general insurance companies recording total assets of $346,500 million at the end of December 2015, up from $321,700 million at the end of the previous year.

Life insurance companies accounted for 81 per cent of those numbers.

“It is notable that the general insurance companies recorded an average minimum continuing capital and surplus requirement of 362.1 per cent, which more than doubled the regulatory benchmark of 150 per cent,” the FSC stated.

In the meantime, at the end of March 2016 there were 44 securities dealers, with two cancellations during the year. According to the report at the end of December 2015, total assets managed by securities companies was $953 million, a decline from the $959 million recorded for 2014. “However total funds under management increased by $124,620 million to $1,150.5 million. FSC is of the view that the entities may have strategically managed more of their client's funds off balance sheet,” the commission remarked.

At the end of December 2015, the unit trust sub-industry comprising 12 schemes managed by five fund managers, with funds totalling $142,500 million, recorded a $39.9 million or 35.81 per cent increase over the end of the previous year.

The FSC said this growth was mainly due to large purchases by investment managers for pension plans and movement of clients' funds from the retail repurchase product of the unit trust products.

There was also an increase in the number of transactions on the junior and main stock markets, with the Junior Market recording a 77 per cent increase and the Main Market a 35 per cent increase.

The commission said it regulated 801 pension plans with assets totalling $396.95 million at the end of 2015, over the $341,410 million recorded for 2014.

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