Financial crises occur around the world for many different reasons and are often driven by instability in one of the many financial sectors. When such a crisis occurs, one constant aspect is that it has always brought a regulatory response aimed at determining the cause and mitigating the probability of recurrence. This concept held true in the Wall Street crash of the 1920s; the banking run in the 1930s; the hyper-inflation crisis in Latin America; the dot-com bubble crisis; the derivative market crisis and the recent global economic crisis fuelled by contagion.
In similar fashion, the Financial Services Commission (FSC) in Barbados was established as a response to turbulent economic times. It was recognised that as a developing global financial centre, Barbados needed to ensure it had a robust regulator in the non-bank financial sector to help build and maintain stability in the financial system. Deliberations on this matter began as early as 2004, and in 2011 a final decision was taken to combine the functions of three regulatory bodies to create a new Commission, with its main objectives being to:
- Maintain financial stability
- Nurture/build a sound business environment that is conducive to growth.
Five years on, the FSC continues to develop as a robust financial regulator. It has been able to attract a staff complement of highly skilled professionals, many versed in the theories and practices of risk management, economics and risk mitigation. They remain insistent on quality output and have helped to establish a growing, high-performance culture within the organisation. The FSC has also been able to build a risk-based regulatory system utilising its resources in the most efficient manner, to manage and mitigate excessive risk-taking in the non-bank financial system.
Along with a strategic plan detailing its road map for organisational growth, the FSC has identified core corporate principles designed to help establish it as a high-quality regulatory body that is constantly focused on becoming the best in the world at what it does. This is achieved, to an even greater degree, with the organisation building its own regulatory practices on international best practices established by such bodies as:
- IAIS (International Association of Insurance Supervisors)
- IOSCO (International Organisation of Security Commissions)
- IOPS (International Organisation of Pension Supervisors)
- ICURN (International Credit Union Regulators Network).
It has also integrated into its operations the recommended practices of the Organisation for Economic Co-operation and Development on exchange of information, and the Financial Action Task Force's recommendations on anti-money laundering practices.
The FSC is fast becoming a thought leader in the area of financial regulation and currently sits on boards of directors and sub-committees of various Caribbean and international regulatory organisations. Of particular note, is the fact that it is now an active member of the Group of International Insurance Centre Supervisors, and as such, seeks to influence the policies set for regulating captive insurance business globally.
In addition to building a robust regulatory framework, this island's sole regulator of the non-bank financial sector recognises the benefits of working with key stakeholders to understand their various operations. It has therefore embraced transparency and dialogue with the regulated entities and their representative groups, as a demonstration of the fact that this approach is central to creating an environment conducive to well-managed growth in these sectors.
The FSC is excited about its achievements thus far. It is even more excited about the future of financial regulation in Barbados and the part the organisation will play in this development. It is keen to ensure that it continues to nurture an environment conducive to positive growth, both in Barbados' domestic financial sector and in the international business and financial services sector.
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