Cedric Stephens | Charter of the FSC Board of Directors | Business
December 29 will mark eight months since the island’s non-bank financial services regulator, the Financial Services Commission, FSC, presented without fanfare its 20-page board charter. A copy of this document, signed by the chairman, is posted on the committee’s website.
A charter is a document that was originally issued by a sovereign – a king or queen – or a state, or, in the case of the FSC, an institution. It specifies the organizational conditions of the entity, its mission or its purpose, the way in which it will exercise its functions, defines its rights and privileges and details the behavior of the directors. The University of the Antilles is an example of an institution constituted and governed by a charter. The FSC, on the other hand, was established by an act of Parliament. He oversees the securities, private pensions and insurance sectors.
With the opposition’s agreement, the government passed a series of regulations governing the appointment, selection and appointment of people to boards of public institutions earlier this month. These measures were adopted in the wake of sustained criticism of governance in public bodies and, some would argue, questionable actions on the part of some boards.
The FSC Board of Directors and its leaders are to be warmly congratulated. Its board charter is a comprehensive manual that can serve as a model for institutionalizing a culture of governance to replace those that currently exist in the public and private sectors. I have served on the board of directors of several private sector companies, including five in the insurance sector. None had a board charter. Not once during my tenure have my more senior manager colleagues discussed any of the 22 elements incorporated into the FSC document. The focus was exclusively on the bottom line.
In the case of appointments to public sector boards, word of mouth suggests that the main consideration, before December 10, 2021, was, “Is he (or she) one of us?” “
By posting its board charter on its website, the FSC appears to suggest to insurers and intermediaries that Articles 3 and 11 (e) of the Insurance Act – which state that “each of the persons who direct or control the business is a fit and appropriate person. to manage or control such a business ”- is inadequate for the 21st century. These institutions should be animated and directed by people within the boards of directors and the direction of the companies having the required competences and within the framework of written charters.
The charter of the FSC Board of Directors incorporates the provisions of the Law on the Financial Services Commission, the Law on the Management and Accountability of Public Bodies and the Corporate Governance Framework for Public Bodies.
The regulator’s February 2019 market conduct guidelines appear to have erroneously assumed that insurers and intermediaries endorse the idea of charters and that their boards have followed the regulator’s lead.
While photographs of the directors were posted on the insurers’ websites, nothing aligned with the charter of the FSC board of directors or explained what principles guided the operations of those boards. In addition, the regulator has enacted a rule according to which “insurers and intermediaries must draw up charters, defining the standards of service to be provided to their policyholders and that a system must be implemented to regularly monitor the quality of the service provided. by members of their staff ”.
According to my information, nothing similar has been done.
Registered insurance entities are also mandated to maintain appropriate and up-to-date employee training policies, procedures and manuals which are approved by the board of directors. I have seen nothing to suggest that three years after the introduction of this rule, insurers and intermediaries were complying with it.
The FSC has set an excellent example in disseminating its board charter that insurance companies and other entities should emulate. The charter deals with governance, strategic direction and accountability. Governance is the framework of rules, relationships, systems and processes within the commission that guide how decisions are made.
Accountability is the result, positive or negative, of the actions of the commission. The clarity with which the institution’s board of directors articulated its mission eight months ago bodes well for the future of the institution and consumers.
Perhaps the regulator’s future actions will help reduce the stress-inducing service culture I wrote about two weeks ago.