BMA’s mandate to include conduct of business
Bermuda’s Governor has provided assent to a bill to amend the Bermuda Monetary Authority Act 1969 by adding a principal object to cover matters related to the conduct of business by financial institutions.
The act is the statute that established the Bermuda Monetary Authority (BMA) and that guides its functions and powers. Since it initially became operative, it has been amended on occasion to allow the BMA’s role to evolve to both lead and respond to the changing needs of the Bermuda financial services industry.
In 2020, the BMA conducted an internal review of its objectives and statutory mandate, which identified the need for a risk-based regulatory framework to enhance customer protection for customers of Bermuda’s regulated financial services providers.
It subsequently commenced a multi-year strategy to establish and implement, through comprehensive consultation with industry and other stakeholders, a conduct of business regulatory regime for Bermuda’s financial services industry.
The passing of this amendment provides the BMA with the express mandate and powers to provide a new avenue of protection for customers using products and services provided by Bermuda’s regulated financial services providers.
The BMA said it has always viewed consumer protection as a necessity to the growth and confidence of the financial services industry in Bermuda. In this regard, historically it focused on prudential matters, such as risk management, governance and general solvency issues, including breaches of law.
However, this amendment will expand the BMA’s regulatory remit to encompass the oversight of the conduct of business by financial institutions with the aim of promoting fair outcomes for customers. Its approach will now include requiring greater transparency on the part of financial institutions, as well as their use of effective policies, procedures and internal structures to treat customers fairly and, in particular, to handle their customers’ complaints through appropriate mechanisms.
The resolution of individual customer complaints will remain outside of the BMA’s regulatory remit.
Craig Swan, BMA’s chief executive officer, said this amendment of the BMA Act marked a key milestone for the regulator’s customer protection strategy, “demonstrating the jurisdiction’s commitment to the highest financial services standards”.
“We appreciate the engagement of government, industry and the general public on this matter and we look forward to continuing to work with the authority’s regulated institutions to support their compliance with the letter and spirit of the codes,” he added.
The newly issued banking sector code will have a six-month transition period. Its effective date will be communicated by the BMA in due course.