November 04, 2020
Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest in the House of Assembly on Wednesday, November 4, 2020, introduced the Financial and Corporate Service Providers Bill, 2020, which will repeal and replace the Financial and Corporate Service Providers Act, 2000.
The DPM explained that the Bill will modernize the two-decade old legal framework of the prevailing Act in a number of vital ways:
• It establishes a full regulatory, internationally compliant framework with appropriate authorities and powers vested in the regulatory authority – the Securities Commission of The Bahamas, to oversee and enforce its provisions;
• it provides much needed legal clarity to the non-bank financial services falling under its remit, in the process creating new entrepreneurial opportunities; and
• it has a significantly greater focus on customer protection and safeguarding the public than the previous Act did, amongst other things.
He noted that according to the Securities Commission of The Bahamas, which has been the duly appointed Inspector of Financial and Corporate Services since January 2008, as at the 30th of September there were 344 financial and corporate services licensees. DPM Turnquest stated that of note, the Financial and Corporate Service Providers Bill directly impacts Bahamian entrepreneurs and operators, perhaps more than any other financial services legislation.
He said, “While the Bill attracts Bahamians engaged in corporate services activity, it also captures many of the non-bank financial services activities Bahamian entrepreneurs are involved in.
“By non-bank financial services, I refer to financial services provided by persons who are not licensed as banks by the Central Bank of The Bahamas, nor registered with the Securities Commission under the Securities Industry Act, 2011.
“These activities include money lending, debt collection, financial leasing and payday and cash advance services, for example.”
The DPM explained that the work to overhaul the legal framework and repeal the former Act came after a complete review of the prevailing legislation.
He stated that the Commission engaged in extensive engagement with the industry since then to develop a modern framework that was in keeping with international best practices and standards. The first draft of the Bill, which contained the more substantial revisions, was issued for public consultation between the 20th of July and the 16th of October, 2017.
“A second draft, with additional revisions, was issued for consultation between the 9th of July and the 19th of August, 2019. A final draft was issued for consultation on 14th October of this year. Over these years, the Commission has also held a number of industry briefings to further engage with the industry on the direction and development of the Bill.”
DPM Turnquest said as a part of the development of the Bill, the Commission aimed to hone its understanding of the financial and corporate services industry, and, in particular, the financial services that were being provided in The Bahamas.
Among the things the Commission observed was increasing non-bank financial services activities, such as offering loans to the public, payday advance services, and retail businesses self-financing consumer goods.
He said these all had implications for proper industry oversight to ensure that the consumers of these financial services were not abused, and had appropriate protections under the law. Related to this, the Commission also observed the continuing trend of scammers seeking to defraud Bahamians of their hard-earned money through unscrupulous financial schemes, with little legal recourse.
By Llonella Gilbert