JAMAICA’S financial regulatory system is entering one of its most consequential transitions in decades, with the country’s non-bank watchdog moving to sharply increase industry fees after recording a $502-million deficit and expanding its operational footprint.

The Financial Services Commission (FSC), which supervises securities dealers, insurance companies, pension funds and other non-deposit-taking institutions, is projecting $2.76 billion in revenue for the March 2027 financial year — up from an estimated $1.91 billion in 2026. The increase will be driven largely by revised securities and insurance fee structures and new charges introduced through legislative amendments passed last year.

The revenue push follows a period of financial strain. Although the FSC had projected a $165.67 million surplus for the March 2025 financial year, it instead reported a $502.4-million deficit after revenues fell short of the $2.52 billion target, with total income reaching $1.77 billion. The regulator is forecasting a further $407.3 million deficit in 2026 before narrowing the gap to an estimated $186.2 million in 2027 as higher fee collections take full effect.

At the same time, its cost base has grown significantly. Salaries climbed to $1.76 billion in March 2025, up from $1.12 billion two years earlier, as staff numbers increased from about 157 employees to roughly 180. The commission’s expanding wage bill reflects both operational growth and preparations for new regulatory responsibilities.

Under rules that took effect on July 31, 2025, securities dealers must now pay $1.5 million or 3.0 basis points — 0.03 per cent — of total assets, whichever is greater. The new formula replaces a tiered structure that began at 0.05 per cent on the first $5 billion in assets and stepped down for larger balances. Based on core securities dealers holding $985.39 billion in assets at the end of September 2025, the revised structure would generate approximately $295.6 million in annual fees, compared with about $77.9 million under the previous schedule.

Additional amendments to the Securities (Take-Overs and Mergers) framework have introduced fixed filing fees of $800,000 for takeover bid circulars and directors’ circulars, and $200,000 for amendments — creating a new revenue stream that did not previously exist in statute. Insurance sector fees are projected to rise to $836 million in 2027, up from an estimated $534.7 million in 2026, while the FSC expects to collect $21.25 million in fees from virtual asset service providers once legislation governing that sector is enacted.

Because the FSC is self-financing, higher regulatory costs ultimately flow through to the securities, insurance and pension sectors it supervises. In a market where securities dealers collectively manage close to $1.65 trillion in assets, the revised structure materially increases the industry’s regulatory bill, with potential implications for operating margins and pricing structures.

Unlike some public bodies, however, the FSC cannot adjust its fees unilaterally. Changes require legislative amendments under the Securities Act and Insurance Act — a process that acting deputy executive director Donia Fuller-Barrett said had delayed implementation despite industry being advised years ago that revisions were coming.

The fee revisions are unfolding alongside a structural shift in Jamaica’s supervisory architecture. The country currently operates under a dual-regulator framework, with the Bank of Jamaica overseeing deposit-taking institutions such as commercial banks and the FSC regulating the wider non-bank financial sector. Under the transition to a “twin-peaks” model, the central bank will become the sole prudential regulator responsible for financial soundness across the system, while the FSC will concentrate on market conduct and consumer protection within the non-bank space.

That transition expands and sharpens the FSC’s focus at the same time that it is seeking to restore financial balance. To support the shift, the commission has established a board regulation and supervision committee, created two executive management committees and added a deputy executive director post. The Securities (Conduct of Business) Regulations — pending gazetting earlier this year — are expected to modernise compliance standards and strengthen investor protections across approximately 50 registered securities firms.

“These strategic initiatives will improve corporate governance, enhance decision-making, streamline operations, and position the FSC for sustained success in fulfilling its statutory mandate. They will also position the FSC to effectively discharge its new duties as the market conduct regulator for Jamaica and the regulator/supervisor of the virtual assets industry,” said former FSC chair Richard Byles in the March 2025 annual report.

The commission is also preparing to regulate virtual asset service providers in line with recommendations 15 and 16 of the Financial Action Task Force, an effort aimed at strengthening Jamaica’s compliance with global anti-money laundering standards. Draft legislation has been circulated among stakeholders following revisions by the Office of the Parliamentary Counsel. Further reforms are under way to establish a microinsurance framework and advance private pension reform, including changes addressing vesting, portability and indexation.

The FSC last recorded a surplus in March 2024, when it posted $13.9 million after absorbing $125.5 million in costs linked to a cyber incident in August 2023. In March 2023, it reported a $133.3 million surplus.