Rohan Barnett, new executive director, inside his office at the Financial Services Commission.
Rohan Barnett, the Kingstonian turned New York-based commercial lawyer, had a longing to come home, but he has parachuted into a job that has become a hotbed based not only on unfolding global financial events, but also drawn-out domestic regulatory issues.
Barnett, who took up office as executive director of the Financial Services Commission (FSC) on January 5, comes to the post at a time of great uncertainty in the markets.
Industry sources say some investment vehicles are being suspended as the US contagion spreads and investors make a grab for cash.
Some brokerages are having a hard time selling even basic financial products and the institutional investors who remain in the market, are redirecting resources to less risky short-term investments.
Matters arising
Just days into his new assignment, securities dealers and insurers have already served the new regulatory head with a raft of matters arising, including their beef with slow and cumbersome processing of new licence applications, onerous reporting requirements, and overdue new legislation, for example, the pension reforms.
Add to that the fact that the FSC has not yet overcome recent public backlash, having been demonised in some quarters as the catalyst behind the fall of elaborate investment schemes run by operations such as, but not confined to, Olint, Cash Plusthe fall of elaborate investment schemes run by operations such as, but not confined to, Olint, Cash Plus and Worldwise.
Barnett rejects the notion that the FSC is entirely at fault for what is seen as lengthy delays in the processing of applications for the registration of either new financial services entities or new investment products.
"Registration of applications that were properly submitted has actually been efficient," he suggests.
In most instances, delays are due to inadequate information being filed with submissions, he said.
New securities dealers
The new securities dealers and one mutual fund were registered by the FSC between January and December last year, bringing the number of entities under its supervision to 86 - with 50 being securities dealers, 18 mutual funds, 12 general insurance companies and six life insurance companies.
It is understood that the sole dealer application turned down during the period was that of Worldwise Investment, which, at the height of its troubles last year, had signalled its intention to sign up with the authorities, but up to last reports, was unsuccessful in its bid to be listed by the FSC as a licensed investment adviser.
The FSC disclosed to the Financial Gleaner that at January 15, 2009 a total of 2,872 applications had been received for registration and licensing of pension plans, trustees, responsible officers, administrators and investment managers under the Pensions (Superannuation Fund and Retirement Schemes) Act. Of these, 10 were received in the 2008-2009 financial year, seven for superannuation funds and three for retirement schemes.
Of the 2,573 net pension plan-related applications - that is, discounting withdrawals, termination or resignation of responsible officers and or trustees from the total 2,807 such applications - only 1,686 are deemed by the FSC to have been accompanied by all the required documentation.
Of the 1,686 proper applications, 1,281 have been approved, 220 are said to be awaiting approval, 117 categorised as 'work in progress', 67 were given 90 days to comply with regulations, and one was refused a licence.
Given the veritable minefield in which he and the FSC must operate, the new regulatory head was somewhat cagey in a recent interview with the Financial Gleaner. Indeed, caution characterises his initial approach to the job.
Sprinkling of optimism'
But Barnett says somewhere in the mix is focus and a "sprinkling of optimism", notwithstanding the wipeout of billions in stock market wealth, job cuts, and a slowdown of productive activity.
"I think that there are some very challenging issues, but this is a time when we can effect some significant change," said the FSC head.
"If there has to be an overall correcting or repositioning of the industry as a whole, this is the time to do it, so that during the post-crisis period we will be in a better position. There is an opportunity now for significant change," Barnett said, keeping his answer in the realm of generalities.
The new FSC head has declined to say what new rules are being developed in response to the demands of industry players and the global financial meltdown, which have not entirely spared local financial institutions and investors, even though the industry and the government have so far shied away from disclosing the full extent of local exposure.
But, he is convinced that existing regulations, more than anything else, have spared the Jamaican financial sector more serious shocks from the global crisis and the unregistered financial organisations (UFOs) conundrum.
While he believes that the regulatory framework, established when the FSC was set up in 2001 in response to the local banking collapse of the 1990s, remains sound and relevant, Barnett has alluded to a few alterations to come.
In addition to short-term changes to existing rules, he noted: "There are longstanding restrictions that are obsolete and inefficient and we will likely be looking to remove some of those in the medium term."
He could not say when those changes would come on stream, opting, he said, to allow the process of legislation development to run its course. Barnett was mum too on whether the FSC's legal people have completed their work on the second phase of pension reform, now awaiting enabling legislation to see the light of day. The office of the chief parliamentary counsel, redirected queries on the matter from the Financial Gleaner, to the finance ministry, which remained tight-lipped up to press time.
Pension regulation changes
Changes to pension regulations are definitely in the works. Minister without portfolio in the Ministry of Finance, Senator Don Wehby, was quoted recently as forecasting that when governance of pension plans has been enhanced under the new regime, pension coverage will be widened and fund administrators and managers will see a significant jump in assets under management resulting from the widening of their client base.
See Sunday Business for the continuation of this story.
huntley.medley@gleanerjm.com