The development of business and the establishment and prosperity of companies are matters of great social and financial importance to every one of us living in these islands. That is one main reason why regional governments are encouraging the spirit of entrepreneurship among our young people.
Yet, as some recent events have shown, there have been practices and developments by some company managers and directors that show us what Britain’s Prime Minister Edward Heath once referred to as the “unacceptable face of capitalism”.
The story of failed and collapsed companies can sometimes be the result of fraud, or it may just be the luck of the draw and the miscalculation of risk that carries no criminal intent of any kind.
Because of the importance of companies and the possibility of things going wrong, the need for competent regulation and the enforcement of prudential practices is a necessary part of the corporate and business landscape, for overreaching and over-optimistic assessment of risk can be as dangerous to our society as deliberate fraud practised by deviant directors. Either way, the society at large suffers.
It is in this context that we welcome the establishment of the Financial Services Commission (FSC). It is a policy initiative that has enjoyed bipartisan support and is in many respects long overdue in a society that is rapidly developing sophisticated ways of doing business.
Now while creativity in business is a very important ingredient without which growth could hardly take place, the operational areas of the non-banking financial services sector, such as credit unions, insurance companies and pension funds management firms, matter greatly to people whose financial well-being is to a very large extent wrapped up in these entities and institutions.
We trust that the public will appreciate the need for increased regulation and will support the greater stringency and extra form-filling, which these institutions may have to enforce in order to comply with best practice in regulation.
The collapse on the local scene of Trade Confirmers Ltd, the Bank of Commerce and Credit International, and the cessation of business by the Great Northern Insurance company, not to mention the difficulties of Colonial Life Insurance Co. Ltd, clearly demonstrate vividly why we need improved regulation of non-banking financial entities.
During the recent meltdown and the mortgage and banking crisis that hit the United States and Britain, our banking system was able to carry on business unscathed, simply because of proper regulation that enabled the public interest to be protected from the adventurous and speculative behaviour, and the rampant, unbridled and unregulated practices developed elsewhere.
What must now be avoided at all costs is the infiltration of political influence even of the slightest kind in the management and the choice of staff of the FSC or in any of the decisions taken.
The managers of the Insurance Corporation of Barbados and the Central Bank of Barbados, both of which are involved in financial services, have established sterling and exemplary institutions which show that the public service operations can be managed in a proper businesslike manner without political influence featuring in their decision making, even as they both were publicly held corporations.
The Financial Services Commission may choose to follow its own footprints or it might adopt the formula which these two corporations have adopted. Whatever is done, the investing public of this island has a large and heavy stake in the success of proper and skilled regulation of the entities under its control.
We feel confident that members of the commission and its employees are conscious of their public responsibility, and we urge fullest support as they set about their task of continuing and improving the protection of the public interest.
