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Bermuda Responds To Foot Report's Recommendations

by Phillip Morton, Investors

03 November 2009

The Bermuda Monetary Authority has responded to recommendations in Michael Foot’s report on the review of the British Offshore Financial Centres, presenting proposals to target areas highlighted within the report.

The Authority has been actively addressing the Report’s five recommendations to regulators, namely:

  • The need for increased resources: the Report emphasizes the importance of ensuring that regulatory authorities have sufficient resources to conduct their responsibilities, and notes that the BMA has in fact increased its resources significantly over the past five years. The BMA Board has recently approved significant increases in the Authority’s resources to ensure the BMA continues to deliver effective supervision, and that Bermuda remains able to meet the demands of implementing and enforcing international regulatory standards.
  • Establishing good governance arrangements: this recommendation appears to be focused on smaller offshore territories, but the Authority argued that it should be noted that the the BMA has been continually upgrading its governance framework over time, and is currently conducting a further benchmarking exercise to ensure that its framework remains effective.
  • Suggestions for design principles of deposit protection: the Authority is in the process of working with the government to develop proposals in this area, and observed that the recommendations in the Foot Report will be helpful for this work.
  • Ability to take robust action over large banks and clear powers for intervention: The BMA noted that the report commends the prompt action and close oversight of the Bermuda authorities in addressing the pressures facing the local banking sector. The Authority currently has a project underway examining further enhancement of its bank intervention powers.
  • Ability to commission independent firm reviews: the Authority already has the power to commission independent reviews of firms, at the firms' expense, and it has used this power during the financial crisis.

Matthew Elderfield, CEO of the Bermuda Monetary Authority, announced that:

“While we are pleased with the progress we have already been making in the areas recommended by the report, there is no room for complacency."

"We recognise that the Authority’s continuing work programme must ensure Bermuda maintains its high regulatory standards and cooperative approach in the international financial sector. This recognition has driven the work we have underway to enhance Bermuda’s regulatory framework.”

“Our intention is to ensure that the momentum around the Authority’s continual improvement process remains in place, particularly as we work toward our goal of achieving regulatory equivalence for Bermuda,” added Jeremy Cox, incoming CEO at the BMA.

He concluded: “With that in mind, the Authority, like other financial regulators, can use the Foot Report as useful reference for benchmarking the arrangements in place for regulation in the jurisdiction.”

The Foot report also examined other key issues for the UK's dependencies and territories, including taxation, in relation to financial stability, sustainability and future competitiveness.

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