By Latonya Linton
KINGSTON, Jamaica, (JIS) – Minister of finance and the public service, Dr Nigel Clarke, says implementation of the twin peaks model of supervision and regulation of the financial sector is expected by 2026, informed that under the model, the Bank of Jamaica (BOJ) will assume full responsibility for prudential supervision of all bank and non-bank financial institutions.
Additionally, the Financial Services Commission (FSC) will be transformed into a new regulatory entity that supervises these institutions from the perspective of market conduct and protection of consumers of financial services. Dr Clarke was speaking during a statement to the House of Representatives on Tuesday, June 11.
Dr Clarke said a Twin Peaks Concept Paper, which outlines the legal and operational contours of the model, was prepared and submitted for his approval by the BOJ-FSC Twin Peaks Steering Committee, chaired by Central Bank Governor, Richard Byles, in 2023.
“The Concept Paper has been approved and we are now in the final stages of the preparation of a Cabinet Submission for the consideration and approval of Cabinet, following which formal drafting instructions will be issued for the development of the Bill to address proposed changes to the law to give effect to the Twin Peaks Model of Financial Regulation in Jamaica,” the minister stated.
Dr Clarke informed that the Twin Peaks legislation’s development is being treated with the requisite urgency and priority, stating that it would be better at this time to focus the limited resources on developing legislation for a comprehensive and robust regulatory framework that the Twin Peaks model will deliver, rather than interim legislation to address the gaps relating to consumer protection for financial services.
“However, we are not waiting on all that time to pass before we begin to address urgent issues affecting the financial sector, especially those pain points being experienced by members of the public who have to use the financial services,” the Minister stated.
Dr Clarke further give the timelines and urgent need to begin addressing some of the deficiencies identified in the shortest possible time, the Steering Committee has proposed that a period of Practice of the Twin Peaks arrangements, within the constraints of the existing statutory provisions, take place before the legal cut-over from the current framework to the new model.
“Further, for the Twin Peaks Model of Financial Regulation to be successful and to facilitate a smooth transition, once the anticipated changes to the legislative framework are passed, the BOJ-FSC Steering Committee has recommended that during the practice period, both organisations collaborate in a structured way to allow a seamless transition for the financial sector and public,” Dr Clarke stated. “The Twin Peaks practice period is scheduled to commence in this quarter and will run through to the selected appointed date when the Twin Peaks legislative changes come into effect.”
The Twin Peaks Practice Period is intended to enable capacity building and closer collaboration between the regulators, pending the legislation’s passage, to enable the model’s implementation.
In anticipation of the proposed legislative changes, the objective of the practice is to prepare team members for Twin Peaks implementation by providing opportunities for real world experience in the supervision and regulation of deposit-taking institutions (DTIs) and non-DTIs, within the constraints of the existing regulatory frameworks. It will also help to lay the foundation to facilitate a smooth transition at legal cut-over to the Twin Peaks Regime.
“It is important to repeat and emphasise that during this practice period, the two regulatory entities – the BOJ and the FSC – will collaborate and operate within the confines of the existing laws,” Dr Clarke adding, “A tangible example of the Twin Peaks Practice was the comprehensive set of Service-Level Standards for the management of automated banking machines (ABMs) by DTIs that were jointly developed by the BOJ and the FSC and issued by the BOJ to its licensees on April 2 this year. The performance of commercial banks against those Standards is now being published so that there can be full transparency and the public can help to hold the institutions to account.”
Meanwhile, Dr Clarke said the laws governing the BOJ and FSC do not currently provide them with legal authority to enforce such Standards related to consumer protection through the imposition of fines, said it is proposed that this will be addressed in the future dispensation under the legislative changes proposed to be made under the Twin Peaks Model.
“In the meantime, the Service-Level Standards for ABMs were developed and issued to address an urgent problem, through consultation. It is anticipated that standards such as these will be incorporated as legally binding regulations when the market conduct and consumer protection framework is passed into law as part of the Twin Peaks Regime,” the minister said.
Dr Clarke added that the various institutions and umbrella associations in the financial sector are now being provided with detailed information on the proposed Twin Peaks Practice, which will occur in phases.
