KINGSTON, Jamaica— Central bank Governor, Richard Byles says the bank has the competence to take on its enlarged role, which involves regulating non-bank financial entities alongside deposit-taking institutions (DTI).
“At the Bank of Jamaica (BOJ), we accept the charge that we have to prepare to supervise the entire financial sector. We do so now for DTIs, and so we are quite adept at doing it,” Byles said.
“We have a lot of international support and expertise and training over the years in respect of this. I have no doubt in my mind that we have the core competence to handle the enlarged portfolio. However, I approach this new challenge with humility because the sector that was outside of the DTI is even larger than the DTI in terms of assets that they manage,” he pointed out.
“We know that we are going to have to depend a lot on the Financial Services Commission (FSC) and the skills and the expertise that exist there,” he added.
Byles was speaking at the Jamaica Stock Exchange (JSE) Investment and Capital Markets Conference at The Jamaica Pegasus hotel in New Kingston on Wednesday, where he addressed the decision by the Government to place regulatory oversight for investment companies under the BOJ.
Minister of Finance and the Public Service, Dr Nigel Clarke, announced on Monday, that the Government is pursuing the twin peak model of financial sector supervision and regulation of DTIs and non-bank institutions.
The undertaking is intended to modify the existing sector-by-sector-based regulatory approach, which sees the BOJ supervising DTIs, with the FSC having oversight for non-bank financial institutions.
The new dispensation will see DTIs, inclusive of commercial banks, building societies, merchant banks and credit unions, along with non-bank financial institutions, comprising securities dealers, insurance companies and pension funds, being consolidated into one institution, the BOJ.
The FSC will be designated to oversee market conduct and consumer protection for the full spectrum of financial services.
Addressing concerns by some members of non-bank financial institutions that the BOJ may be stricter than the FSC, Byles said he is “not going to be insensitive to the nature of the sector that we are about to supervise”.
“All that I can say is that so long as we comply with reasonable rules, so long as we manage risk, I don’t see a problem; I think we will have an excellent marriage,” he said.
The BOJ Governor said he plans to meet with security dealers, insurance company representatives, and pension managers shortly.
“I am… to meet with all of the stakeholders in the entire sector that the FSC was responsible for. I think with that conversation we will have a clearer idea of what it is that you have as a fear for us, and you will understand what it is that we may have as a fear from you,” Byles said.
Byles, who was appointed chairman of the newly constituted FSC Board, will also meet with the board members and staff of the entity on Thursday, January 26.
“I am about to embark on a process tomorrow. I go and meet with the Board and meet with management, and I will meet with staff at the FSC,” Byles said.