INVESTMENT FUNDS BILL AMENDMENT 2020 CONTRIBUTION
CHESTER COOPER, EXUMAS AND RAGGED ISLAND MP
FEBRUARY 5, 2020
It is certainly a pleasure to speak on behalf of the people of the Exumas and Ragged Island in this House for the first time this year after an extended break.
I trust that everyone had a Merry Christmas and a Happy New Year.
I would say that 2019 was a year of ups and downs, highs and lows.
We were struck by a storm that laid waste to so much in our beautiful country.
Some did not make it.
But others survived and shared stories of resilience that captured the attention of the world.
And, we are still all here, I see.
In all things, we must give thanks.
We are grateful that we can draw breath this day and come to work on behalf of the people in our wonderful democracy.
The bill before us today does not require extensive examination from the opposition.
We were, if I remember correctly, just here not even a year ago debating it. We supported it then.
Of course, if one didn’t know better, one would think there’s some sort of déjà vu at play in this place, how often we find ourselves reexamining legislation pushed through by this administration only to come back here to debate it in a very short time once changes are found needed. Sometimes these are changes we previously suggested.
I’ll go through some of the finer points, but I won’t be long with that.
We do support this legislation.
And it is opportune because it gives rise to talk about the broader concerns and issues that plague our financial services and banking sector.
Before I go any further, let me express concern about what I notice as a more troubling trend in the local banking sector.
And it is something I want to bring to the attention of this House, and have placed on the record of this House.
And that is what appears to be the inclination of Canadian banks to diminish their presence in the Caribbean after years and years of billions in profits, without so much as a courtesy call to anyone in the Caribbean.
I have long bemoaned, inside this place, and in other venues, the unfair and efficient practices of what many local banks are engaged in; including fees, delays, holding cheques for inordinate periods notwithstanding the ACH.
We note that Canadian banks who have been here for decades with multiple outlets with massive books of Bahamian loans.
They have been shutting down branches, leaving our Family Islands unbanked and levying fees that cripple consumers.
Where is the love? Where is the loyalty?
The minister of labor had promised to look into it, but nothing has come of it.
Now, we hear of another troubling indicator from a large local bank, primarily owned by Canadian.
Late last year came the news that the Canadian Imperial Bank of Commerce, CIBC, was in the process of selling its Caribbean business to a Colombian institution for close to a billion dollars.
This, along with the pending demise of FirstCaribbean, raises the strategic question of whether regional regulators ought not to unite and ensure that regional players, who are loyal to the Caribbean region not be given first opportunity to acquire these banks and these portfolios.
This might be an occasion for CARICOM to assert itself, supporting regional banks.
If we continue to allow outside players to determine the fate of our local banking systems, without the opportunity to chart our destiny, then we might as well have remained colonies.
As I repeatedly point out, Bahamians have taken control of the insurance sector.
The banking sector control is achievable as well.
I lament that we as Bahamians do not band together to prevent this.
Will Bahamians now have to wait for loan approvals from Colombia?
It makes no sense.
At the very least, we should have sought consultation with our Caribbean counterparts to see how best to marshal our resources and keep this wealth and these banks within CARICOM.
As to the bill before us.
This bill is necessary in maintaining the country’s position, be it ever under assault, in the global financial services industry.
They are technical amendments and not controversial.
This bill just passed in March of last year.
So, it is regrettable that we spend time here today correcting or amending something that perhaps should have been caught in the drafting stage.
If you would take your time, FNM, instead of jumping too fast when someone says ‘boo’, we would not have to duplicate our work in this place yet again.
This bill, as we understand it, does three mains things.
It amends the substantive act to “strengthen the supervisory powers of the Securities Commission of The Bahamas”.
It clarifies the role of the investment fund administrator and investment manager, including licensing and registration of same.
And it clarifies the obligation of the custodian.
In particular, the definitions of ‘professional fund’ have been amended to reflect that persons qualifying to invest in a professional fund must be ‘professional investors’.
The amendments further require that the ‘professional investor’ must have investment knowledge and experience and not qualify solely by financial status.
Also, a new definition of ‘professional investor’ is included in the amendments.
The bill introduces a new provision to empower the commission to appoint an official receiver to oversee the liquidation of an investment fund which voluntarily surrenders its license.
It outlines new procedures for the surrendering of a license and allows the commission to apply for court-supervised winding-up of an investment fund which has surrendered its license without first suspending the license.
The legislation now only requires the registration of investment fund managers, as opposed to require them being licensed.
This Act is a good thing for an industry in The Bahamas often beset by bad news.
It ensures compliance with the EU’s substance requirements, among the EU’s often onerous and shifting rules.
It positions us to be more competitive, our service providers in the institutional fund services will benefit in a premium way as would lawyers, accountants and directors whether the actual administrators are in New York, Connecticut or London.
I note, that since coming to office, this administration has been at the helm as we have been gray-listed and blacklisted repeatedly.
By the European Union in March of 2018.
By the CFATF in October 2018.
By Holland in January of 2019.
By the EU in February 2019.
Gray-listed by the EU in March of 2019.
Blacklisted by France in December of 2019.
You know, one could start casting blame if one were not minded to stand with the government in national unity.
I suppose, for us, we are different than those on the other side in that we do not cheer and crow when the country is black-listed, or gray-listed or downgrading by international agencies.
It is, after all, all our Bahamas. We are nationalist first on these issues.
The opposition remains concerned about the application of different rules for some and we join voices with our counterparts in the international financial centers in a call for a level playing field and the discontinuance of moving of the goal post.
We take particular offence particularly to Holland and France, both members of the EU, acting unilaterally outside of the EU’s own rules with The Bahamas having already complied with the EU mandates.
We wholeheartedly reject this attempt to tarnish the reputation of The Bahamas and our financial services industry, which we have worked so hard to grow, protect and comply with reasonable international norms. The process of these two countries in particular lacks fairness, transparency and credibility.
And we were pleased with the minister of finance’s pushback of late.
The financial services industry knows that a Progressive Liberal Party government will fight to sustain a fully compliant financial services industry.
We will form effective alliances with rival international financial centers and use international law and international oversight bodies like the United Nations to challenge the legitimacy of these blacklists that do real harm to our way of life.
Yes, we are nationalistic in our bi-partisan support for a sensible legislative framework.
And we seek to work with the Bahamas Financial Services Board, regulators and industry stakeholders on a unified strategic plan.
We also congratulate the BFSB on winning the award for outstanding promotion of financial services in the immediate aftermath of Hurricane Dorian last year, by UK-based publication International Investor.
We believe if we all work proactively to negotiate, network and lobby international partners with assistance with regional counterparts where necessary, we can stay ahead of the curve of the existential threats.
Maintaining a presence in the appropriate international bodies, and using our embassies and consulates effectively is also key.
The key to our survival in this space, though, will be building capacity, honing expertise, and implementing common sense regulations and laws like this one.
Further, the government must earmark specific resources along with the industry and the regulators to market The Bahamas in the institutional market to constantly promote The Bahamas. I would recommend that a percentage of fees from industry participants be earmarked to innovation and proactive, progressive industry support.
Before I finish, it would be remiss of me if I did not comment on another trending aspect of the industry.
That is the attrition taking place as we lose international players and bleed jobs that lead to the decimation of the middle class.
Just this week, Julius Baer decided to close shop in The Bahamas as it looked to cut costs and increase efficiency.
That one move cost this country at least 30 direct jobs in this industry.
To help those unfamiliar with this industry understand, these are jobs that pay very good salaries and carry excellent benefits.
They allow Bahamians to purchase homes, insurance, spur construction, pay school fees, buy cars, employ others, start businesses, pay taxes and stimulate the economy in a real and measurable way.
The way of life for many Bahamians is under direct threat as the industry shifts and The Bahamas is left without answers in the face of this.
I am advised that another large international bank is preparing to cut as many as 27 of these very same jobs.
We need to now ask ourselves seriously, what the future holds for the offshore financial services industry in The Bahamas.
And we need to act now.
You would see that those financial institutions that have pivoted to the Latin America market with special emphasis on investment funds are best poised to survive.
However, through blacklisting and bullying, our confidentiality regime has been badly compromised and with that we have lost a great deal of our competitive edge.
There must be, and this is not optional, a strategic plan by the government for the industry to enhance and protect jobs for the middle class.
Or the middle class as we know it will be unrecognizable.
Many of the people let go will now have to defer retirement plans, dip heavily into their savings, perhaps reconsider their children’s education and all their investments.
There may be dark days ahead for some.
It is not a PLP or FNM concern.
But we expect the government of the day to present proactive solutions.
This is a national concern.
One of great importance.
Our business model has to transform.
We need to focus on real international business having a presence here that is supported by the sector.
We need real economic substance and presence.
This will require sensible and harmonious immigration policy that is properly monitored and facilitated.
It will require making sure we tout what is attractive for people who set up these companies to move their families here.
And making sure that living and working in The Bahamas is sold as an attractive option.
This will mean robust ease of doing business reforms policies and processes to make this happen.
When organizations like the BFSB go around the world selling The Bahamas, they are doing precisely that.
And we have to make sure we are able to follow through in country.
We also need a more efficient companies registry.
Global regulation is impacting all jurisdictions, and The Bahamas must be able to compete on service delivery.
We need to leverage opportunities in FINTECH, go after the captive business we lost; dig more deeply into the funds space as this legislation allows us to do.
Businesses won’t flourish if we don’t address inefficiencies in service areas that are meant to support this industry.
The cost of doing business, the consistency and predictability of systems and services by government agencies; the removal of red tape; better turnaround times at the National Economic Council; and smoother approval processes.
We need to modernize our approach and become more business focused and facilitate, rather than impede business opportunities.
We hear about these things year in and year out.
I speak about them year in and year out.
And the response from some in this place is only to heckle.
These are our constituents who are losing their livelihoods.
These are our countrymen who seek to build The Bahamas for their children and their children’s children.
We have no choice but to act.
And to act now.
Or we will lose this precious industry, then spend several generations wondering why we did not do more to preserve what we had.
I thank you for your time.
On behalf of the good people of Exuma, the Exuma Cays and Ragged Island, I rest.
Her Majesty’s Loyal Opposition supports these amendments.