Executive director of the Financial Services Commission (FSC) Lieutenant Colonel Keron Burrell has disclosed that the regulator transferred $500 million from its reserves to the Government under a directive issued through the Ministry of Finance, a move he said reduced the Commission’s financial cushion.

The disclosure came during Thursday’s sitting of the Senate’s Regulations Committee as lawmakers sought to determine why the FSC had moved from recording surpluses in previous years to reporting losses exceeding $500 million.

Burrell identified the transfer as one of three major developments that significantly affected the regulator’s finances, alongside increased staff costs and spending arising from a major cyberattack in 2023.

“Over the period, we also sent $500 million, half a billion [dollars], to the ministry as per the directive of the Ministry of Finance and the FS [Financial Secretary]. So those two, I think, would be the two large items that would have pulled us into the position at the time. The third is that we had a cyberattack in 2023, and that also resulted in a complete overhaul of our IT systems,” Burrell told senators.

Questions were raised after senators noted that the FSC had recently reported a surplus in its 2023 Annual Report, only for the regulator to now disclose losses exceeding $500 million and mounting financial pressures.

Senator Ramon Small-Ferguson subsequently sought clarification on the nature of the transfer, questioning whether the Government had effectively withdrawn funds from the FSC in a manner similar to a dividend payment.

Burrell explained that the Commission acted in accordance with provisions governing self-financing public bodies and had no discretion once the instruction was issued.

“But as per the PBMA (Public Bodies Management and Accountability Act), the ministry can instruct a self-financing body. So they instructed me to send over amounts to them, and I did. It is $500 million, and I did as instructed,” he said.

Additional details were later provided by Head of Administration at the FSC Donia Fuller-Barrett, who said the transfer was made after the ministry requested what is formally termed a financial distribution from the Commission’s surplus.

“Under the PBMA, the FS can write requesting… that from your surplus, you send over what they call a financial distribution, and when that is made ¬– and believe me, we examined it — when that request is made, it’s not something that you can say, ‘No’ to. And so we had to send over that half a billion [dollars] to the ministry when it was requested,” Fuller-Barrett told the committee.

The discussion then shifted to the impact the transfer had on the regulator’s finances, with lawmakers seeking to determine whether the payment contributed to the FSC’s current challenges.

While Burrell stopped short of saying whether the Commission would have remained profitable had the transfer not been made, he acknowledged that the payment significantly reduced reserves that could otherwise have been used to absorb losses.

“What I know is that the half a billion [dollars] reduced the reserve. I’m not sure how the accounting behind it is… But what it did was it reduced the reserves that we have. In case we’re making losses, the reserves are there to allow us to be a growing concern for a longer period of time. So, that would definitely have affected it there,” Burrell said.

The disclosure comes as the FSC seeks parliamentary approval for revised insurance fees, arguing that a combination of rising operating costs, increased regulatory demands and major expenditure items have placed growing pressure on the Commission’s finances.

According to Burrell, the regulator is also grappling with increased salary costs stemming from public sector compensation reforms.