Pe­ter D Nep­tune

For the first time in T&T, the au­thor­i­ties will have the pow­er to im­pose sig­nif­i­cant fines of up to $20 mil­lion for cor­po­ra­tions and in­di­vid­u­als for se­ri­ous in­fringe­ments, such as non-com­pli­ance and fraud, said Carl Hi­ralal, In­spec­tor of Fi­nan­cial In­sti­tu­tions. He said the new leg­is­la­tion will al­so give reg­u­la­tors the pow­er to re­move di­rec­tors and share­hold­ers from in­sur­ance com­pa­nies that breach the laws or have been sit­ed as not "fit and prop­er" for high lev­el ap­point­ment in the fi­nan­cial ser­vices sec­tor. Reg­u­la­tors will al­so have the pow­er to ve­to ap­point­ments and ap­proval must be sought for in­ter­lock­ing di­rec­tor­ships, Hi­ralal said. He was speak­ing at yes­ter­day's pub­lic con­sul­ta­tion on the draft In­sur­ance Bill 2009, at the Hilton Trinidad, St Ann's.

New laws, more teeth

Cen­tral Bank Gov­er­nor Ewart Williams said yes­ter­day that reg­u­la­tors have been clam­our­ing for more teeth to mon­i­tor and reg­u­late the sec­tor, since the au­thor­i­ties do not have the pow­er to en­force many of the new in­ter­na­tion­al­ly ac­cept­ed stan­dards or levy sig­nif­i­cant penal­ties for in­fring­ing the fi­nan­cial ser­vices codes. Williams com­pli­ment­ed in­dus­try play­ers for sup­port­ing the leg­is­la­tion, say­ing said that many of T&T's in­sur­ers have been vol­un­tar­i­ly com­ply­ing with in­ter­na­tion­al and lo­cal stan­dards, but in re­al­i­ty, he said, the bank has been us­ing moral sua­sion to gain their sup­port for the new stan­dards.

Williams was asked about the role of reg­u­la­tors in gov­ern­ment be­ing called in to bail out se­lect com­pa­nies of the CL Fi­nan­cial Group. He said stronger reg­u­la­tions and en­force­ment tools may have pre­vent­ed the cri­sis, but no amount of reg­u­la­tion could have pre­vent­ed the cri­sis if com­pa­ny of­fi­cials are de­ter­mined to keep crit­i­cal in­for­ma­tion away from the au­thor­i­ties.

Fall of Mad­off/Stan­ford

"This is true for the fall of Ru­pert Mad­off and Allen Stan­ford, and we could on­ly re­spond to in­for­ma­tion we re­ceive from com­pa­ny man­agers and the au­di­tors. "We all have 20/20 vi­sion af­ter the fact, but what you will re­alise is that there is al­so plen­ty of blame to go around. "No writ­ten laws can pre­vent fraud if an un­scrupu­lous op­er­a­tor wants to de­fraud the pub­lic. What we have to do is to en­sure that the le­gal frame­work is in place and en­sure that the checks and bal­ances are ad­e­quate to de­tect and mon­i­tor ir­reg­u­lar­i­ties in the sys­tem.

"This is what I be­lieve the new leg­is­la­tion will pro­vide for reg­u­la­tors and this will en­hance the con­fi­dence of the pub­lic and in­vestors," Williams said. He said reg­u­la­tors should have been more vig­i­lant with Cli­co–one of the bailed out com­pa­nies in the CL Fi­nan­cial Group–but he be­lieved the new laws be­ing pro­posed will pre­vent such is­sues from re­cur­ring. Williams said ad­di­tion­al leg­is­la­tion, in­clud­ing laws gov­ern­ing the op­er­a­tions of pen­sion funds, are al­so in the pipeline, and it will be re­leased for pub­lic com­ment in less than a month.

"When placed to­geth­er, the in­sur­ance leg­is­la­tion, pen­sions leg­is­la­tion, as well as oth­er reg­u­la­tions soon to be pro­posed, will pro­vide a com­pre­hen­sive pack­age for the fi­nan­cial ser­vices sec­tor. "This will go a long way to­wards mod­ernising the sys­tem and will fos­ter con­fi­dence in the lo­cal fi­nan­cial ser­vices sec­tor. We are look­ing at meet­ing or sur­pass­ing all ap­plic­a­ble in­ter­na­tion­al stan­dards to make the sys­tem ro­bust and at­trac­tive to in­vestors.