THE main agenda item during Friday’s sitting of the Senate was to introduce a Bill to govern the winding up of financial institutions, but before that could be done the Opposition raised questions about the constitutionality of tabling the Bill in the Upper House.

The most vocal was Opposition Senator Lambert Brown who argued that the Financial Institutions (Resolution and Winding-Up) Act, 2024, is the responsibility of Minister of Finance and the Public Service Dr Nigel Clarke and should therefore be tabled in the Lower House.

“We were brought here, I’m told, for this [Bill] to be tabled but the proper place to table is to go where the minister with portfolio responsibility sits… which minister here [in the Senate] has responsibility for this portfolio under which the…Act comes?” he asked.

Acting Clerk of the Houses of Parliament Tracey Cohen responded that it is not a money Bill, which would prevent it from being tabled in the Senate.

“It is a Bill relating to the arrangements for financial institutions, as to how they’re to be wound up. I believe what cannot be tabled in the Senate are matters that affect the budget,” she said.

However, Government Senator Aubyn Hill said the Bill had to be timed in keeping with International Monetary Fund (IMF) obligations.

“The minister is actually in Singapore, and because of the commitments we have with the IMF it has to be tabled today to meet the commitment and so there’s a timing issue. He still [has] responsibility for the Bill but he’s not in Jamaica and we have to make that timing requirement, so it is being tabled today in the Senate — and it’s not then to usurp his authority but to make sure we meet the timeline with the IMF,” he explained.

But Brown continued to argue about the rationale for the Bill being tabled in the Senate. “Because issues of the constitution, be it the tracking of people’s privacy or otherwise…,” he started before being cut off by Government Senator Charles Sinclair’s objection.

“I don’t know where Senator Brown is actually going. What he’s saying is totally irrelevant… the issue that you have before you is one as to whether a Bill can be tabled here. Where he is going with his commentary about tracking and all that has nothing to do with what we’re dealing with right now. It is irrelevant,” Sinclair insisted.

“The acting clerk has indicated to all of us, I’m certain Senator Brown would have heard it, that it is not a money Bill. The Standing Orders that we have and we practise under allow, under Standing Order 48, for what is being done to be done,” he added.

Brown said the concern he has is that, as senators, they have to be zealous in guarding the constitution, “and if a Bill comes under the name of a minister who sits in another place it is our duty to ask whether that conforms with the constitution”.

The Bill seeks to establish a framework for the orderly exit from the system of financial institutions that have ceased to be viable or are likely to cease to be viable through resolution or winding up; to make provision for the voluntary winding up of financial institutions; and for connected matters.

According to the Bill’s memorandum of objects and reasons, the legislation seeks to establish a framework, in accordance with international best practice, for the orderly exit from the financial system of non-viable financial institutions, which pose a threat to the stability of the financial sector, through resolution or winding up.

This is to safeguard the public, the national economy, and to eliminate or mitigate the need for any recapitalisation by the Government which may arise due to the failure of a financial institution, while protecting the continuity of critical functions.

Additionally, this framework will be set up to avoid or mitigate the risk posed by the non-viability of a financial institution to the stability and effective working of the financial system — without unduly exposing taxpayers to loss — through mechanisms which make it possible for shareholders and certain classes of unsecured creditors to absorb losses in a manner that respects the hierarchy of claims.

The Bill also seeks to provide for co-operation, information exchange, and coordination among regulators, compensation scheme managers and resolution authorities — including foreign resolution authorities — in respect of the resolution of non-viable financial institutions and to make provision for the voluntary winding up of viable financial institutions.