Five-year deadline
In response to Government’s debt restructuring programme, the Financial Services Commission (FSC) is exercising regulatory forbearance.
Head of the FSC, Kester Guy, said debt restructuring would reduce statutory benchmarks across the non-banking sectors.
“Given the long-run viability of this sector and that the Government debt restructuring is an external shock to the industry, the FSC has decided to
exercise regulatory forbearance by allowing all entities up to five years to fully make up any resulting deficits or breaches of caps of certain types of instruments. Adjustments should be made up at an even pace across the period and not only at the end of the period,” he outlined.
In addition, Guy stated the Commission’s intention to modernise the regulatory regime for non-bank financial institutions, including the adoption of risk-based capital requirements.
“Non-bank financial institutions will be given a five-year time frame to make the necessary adjustments,” he added.
At the time, he was delivering opening remarks at Eckler’s Investment Policy Review for Pension Plans conference at the Lloyd Erskine Sandiford Centre.
Currently engaged in examining the impact of sovereign debt restructuring on pension funds, Guy stated that while the natural expectation was that the short-term impact would be negative, he was uncertain as to whether the medium to long-term effects were as conclusive.
Noting that in the short-term, pension plans once considered fully funded were now exposed as unfunded, he posed several questions on the way forward.
“Will employers be called upon to service debts that have since arisen in the aftermath of the restructuring programme? What does all this mean for investment strategies? Are pension plan administrators actively revising and restructuring their Statement of Investment Polices and Goals to chart a path forward? These are but a few critical questions or concerns taught pension funds and on a broader level, the pensions industry continues to grapple with,” Guy added.