Enactment of the Financial Services (Exceptional Circumstances) Act 2020
The Financial Services (Exceptional Circumstances) Act 2020 (theAct) was brought into force on 28 March 2020 and it was published in the Official Gazette on 2 April 2020. The Act provides for special measures for the conduct, operation, licensing, regulation, supervision and generally for the continuity, administration and transaction of financial services business in and from within the British Virgin Islands (theBVI) in the event of any exceptional circumstances arising which affect financial services business and therefore require the adoption of special measures, and for other matters.
The BVI enacted similar legislation in the form of the Financial Services (Continuity of Business) Act 2017 (the 2017 Act) following the passage of Hurricanes Irma and Maria to allow BVI entities to carry on with their business with as little interruption as possible. At the present time, there are no hurricanes but the world is currently facing a global pandemic in the form of COVID-19 (the novel coronavirus) which has disrupted normal routines and the ways in which businesses traditionally operate. The BVI’s financial services industry is not without any impact. However, with the passing of the Act which is a new and all-embracing legislation, it deals with how financial services businesses will continue to operate in exceptional circumstances when they arise.
Some important points under the Act are as follows:
- Under the Act, “exceptional circumstance” is defined to mean any circumstance that arises in or outside of the BVI which the Minister with responsibility for financial services matters declares to constitute an exceptional circumstance. Such an exceptional circumstance may relate to natural disasters, health hazards of epic proportion or similar occurrences. When these types of situations arise, the Minister may, with the advice of the Financial Services Commission (FSC), issue an order published in the Gazette to activate the mechanics of the Act in relation to all or any particular sector of the financial services industry.
- The exceptional circumstance must be of a nature that makes the conduct, operation, licensing, regulation, supervision or generally any administration or transaction of financial services business in and from within the BVI difficult or impossible if the normal rules under the Financial Services Commission Act 2001 were to be applied, otherwise the exceptional circumstance must be such that it requires the adoption or application of different or special measures to facilitate the conduct, operation, licensing, regulation, supervision or generally any administration or transaction of financial services business in and from within the BVI.
- The Ministerial Order activating the provisions of the Act may apply to all or only specified provisions and may extend to all or only specified licensees. Equally, it may exclude the application of all or any provisions of the Act to any particular licensee. The Order must provide the date when it takes effect and such effect can be retroactive.
- The Act gives the chairman of the board of directors (Board) of the FSC and the managing directors powers to exercise in the event of an exceptional circumstance arising. This is designed to facilitate taking decisions when the Board is unable to meet or when the internal organs of the FSC cannot be activated in the normal way. In such situations, the quorum requirements will not apply.
- The Act makes provision to allow licensees to relocate outside of the BVI and elsewhere within the BVI during any period of occurrence of an exceptional circumstance. Various conditions will need to be met when extra-territorial relocation is being pursued.
- The Act establishes the Financial Services Complaints Tribunal and exempts insurance loss adjusters from the licensing requirements under the Insurance Act 2008 during or after a period of occurrence of an exceptional circumstance.
A copy of the Act can be found here.
An updated post on this subject can be found here (published 11 October 2021).