Regulatory update: Amendments to the Financial Services Commission Act 2001

Various sections of the Financial Services Commission Act, 2001 (the FSC Act) by the Financial Services Commission (Amendment) Act, 2015 (the Amendments) have been amended and enacted.

The background to the Amendments stems from the recommendations arising from the 2010 International Monetary Fund Report and various matters that were considered as being fundamental to good governance as Government ensures that the Financial Services Commission (the FSC) is effectively able to carry out its mandate. This note sets out in summary form some of the significant Amendments. 

Appeal board: The Amendments repeal the sections of the FSC Act that relate to the Financial Services Appeal Board (the FSAB). The reasoning set out in the explanatory note to the Amendments for this is that in keeping with the spirit of good governance the FSC should not have responsibility for hosting the FSAB or remunerating the FSAB’s members for services rendered and that keeping the FSC and the FSAB separate and distinct will ensure greater transparency of an appeal process relative to the decisions made by the FSC. 

Crisis management: The FSC will have crisis management and exercise resolution powers that will be geared towards:

  • Ensuring financial stability and the continuity of systematically important financial services, including payment, clearing and settlement functions as may be considered necessary in any particular circumstance(s) 
  • Assisting the Government, in relation to any insurance deposit scheme and arrangement, in protecting depositors, insurance policy holders and investors that may be covered by such scheme and arrangement
  • Ensuring the continuity of essential functions and services in relation to regulated persons and non-regulated persons by adopting such measures as may be prescribed in the regulations or the Regulatory Code, 2009 (the Code)
  • Effecting the closure and orderly winding down of the whole or part of a regulated person or non-regulated person so as to minimize or prevent any loss to investors
  • Imposing a moratorium on such payments and activities as may be prescribed in the regulations or the Code

Litigation: The law relating to the FSC’s power to recover the cost of litigation that arises in providing mutual legal assistance to foreign regulatory authorities is clarified and enhanced. The Amendments require that where a Commissioner, member of the Enforcement Committee (the EC) or Licensed and Supervisory Committee, (the LSC) or any employee of the FSC incurs any cost in defending an action brought against him or her in relation to anything done or omitted as Commissioner, member of the EC and the LSC, or an employee of the FSC, the FSC shall pay for or reimburse the cost of defending the action. It should be noted that this obligation on the FSC does not extend to payment of any damages or compliance with any restitution order that may be made personally against an employee of the FSC. 

Training and education: The scope of the FSC’s functions will be expanded to include educational and training functions. The FSC whether acting alone or in connection with such persons as the FSC may determine for the purposes of maintaining integrity and professionalism in the BVI’s financial services industry can: 

  • Develop a system of continuing education for practitioners in financial services business
  • Develop a curriculum to further or facilitate the education of students and practitioners in financial services business
  • Develop and publish literature, including textbooks and journals, in relation to financial services matters as the FSC thinks fit
  • Undertake any such other activities as the FSC considers appropriate to promote knowledge of financial services business at all levels within the BVI.