Bermuda: Raft of financial regulations passed

By added on 24/07/2012

The House of Assembly passed a raft of legislation aimed at regulating various aspects of Bermuda’s financial institutions, reports the Royal Gazette.

The legislation also boosts the power of the Bermuda Monetary Authority (BMA), granting it the ability to impose penalties of hundreds of thousands of dollars and ban institutions from providing services or publishing information.

Rolling out the bills, Premier Paula Cox said that the legislation is intended to raise standards to ensure Bermuda keeps up with international best practice.

And while opposition members supported the legislation, they expressed concern that increasing regulations may discourage entrepreneurs from entering the industries.

Laying out the first piece of legislation, the Insurance Amendment (No 2) Act 2012, Ms Cox said: “The enhancements set forth in this Bill reaffirms our alignment with international standards and best practices as well as underscores our intent to be a leading international regulator of insurance companies and groups.”

She said the main objective of the bill is to extend certain fiscal reporting requirements, as of January 1, 2013, but the legislation also discontinue the practice of granting duel insurance licences and makes numerous clarifications to the base act.

Shadow Finance Minister Bob Richards responded that the legislation establishes red tape for businesses in the Industry.

“Sometimes red tape is a necessary evil, there’s no question about that even though I come from an entrepreneurial background I understand that red tape is necessary and regulation is necessary,” Mr Richards said.

“But it seems to me that some of this is what the old-timers used to call ‘busy work’ which means you appear to be busy but the activity is really not achieving anything substantial in the end.

“Less so with the Insurance Amendment Act but more so with the others presented today, we’re laying on another layer of red tape and I don’t know what Bermuda is going to get out of it.

“If our objective is to create more jobs in this country, particularly in the private sector we have to do something that’s going to help entrepreneurs create those jobs.

“And I don’t see how this is going to do that, I see it in the Insurance Amendment Act, but I don’t see it in the other ones.”

Debate over the Investment Business Amendment Act 2012 and the Trust (Regulation of Trust Business) Amendment Act 2012 was similar, with the opposition parties supporting the legislation but warning that stricter regulations may hinder businesses in the investment and trust industries, particularly smaller operations.

While Mr Richards said he understood the reasoning behind the legislation, he said the stricter regulations would make it more difficult for smaller, upstart operations.

“It’s making it more difficult for a Bermudian who is an aspiring entrepreneur in the field of investment to do what I did in 1998,” Mr Richards said. “Businesses will have to have a substantial amount of capital, which I didn’t have. These are barriers to enter into the sector, in my experience.”

United Bermuda Party’s Charlie Swan echoed Mr Richard’s sentiments, saying it would be unfortunate if young Bermudians feel they need to move off the Island in order to enter the business.

Premier Cox also said that the Government is trying to strike a delicate balance in order to not only support the industry, but make sure that the right regulations are in place to protect the public.

Business Development Minister Wayne Furbert led the debate on the Corporate Service Providers Business Act 2012, which he said would further empower the BMA while streamlining bureaucracy, ending the practice of double vetting.

OBA’s Shawn Crockwell expressed the OBA’s support of the legislation, saying the issue of double vetting has long frustrated businesses, but he cautioned that high standards must be preserved.

“In order for this to work, we have to make sure Corporate Service Providers all do that aspect of their job at a high level,” Mr Crockwell said. “We are requiring these companies to provide this kind of vetting and scrutiny of their own customers.”

Mr Furbert said he was disappointed to hear the opposition repeatedly say that while they support legislation put forward by Government, they have concerns.

“They want to have it both ways,” Mr Furbert said. “I think this is good stuff. It’s good legislation. It’s good for the country.”