Financial services firms get stiff fines - Independent Online Financial services firms get stiff fines - Independent Online

Sunday, June 10, 2012

Financial services firms get stiff fines - Independent Online

Financial services firms get stiff fines - Independent Online

The Financial Services Board (FSB) Enforcement Committee, the board’s administrative justice arm, has fined two financial services companies R100 000 each for not adhering to the law.

* The first, Regent Life Assurance Company, was fined R100 000 for contravening the policyholder protection rules of the Long-Term Insurance Act, in that Regent:

- Entered into an agreement in connection with its insurance products with Gertel Algemene Handelaars CC trading as Multi Brokers, while Multi Brokers was not authorised to render financial services;

- Did not provide a policyholder with written information; and

- Conducted business with Multi Brokers without having entered into a written agreement.

The second, Ness Consulting Services, was fined R100 000 for contravening the Financial Advisory and Intermediary Services (FAIS) Act for conducting financial services business with another company, Prospercare Benefit Solutions, which was not licensed to render financial services in respect of funeral benefit policies.

And Prospercare Benefit Solutions was fined R80 000 for contravening:

- The FAIS Act by giving advice and rendering intermediary services on long-term insurance policies without being licensed to do so in terms of the Act; and

- The Long-Term Insurance Act by inducing consumers to buy or continue long-term insurance policies by offering a competition draw that made them eligible to win various types of prizes.

Other recent fines handed down by the Enforcement Committee include:

* Prosperity Group was fined R50 000 for negligently allowing at least one staff member to sell fraudulent life assurance policies to earn commissions. Prosperity clients had their bank accounts debited for the premiums.

The Enforcement Committee found the negligence was a contravention the FAIS Act’s general code of conduct for authorised financial services providers (FSPs) in that Prosperity failed to render financial services with due skill, care and diligence and in the interests of clients and the integrity of the financial services industry when it failed to put in place proper internal controls to prevent or detect the submission of fraudulent applications for insurance cover by its employees.

Prosperity accepted responsibility for the contravention, reported the case to the police, assisted the police in apprehending one of the suspects, reversed the commissions and reimbursed the clients whose accounts were debited as a result of the fraudulent cover.

* FSP Clement Karabo Phakane was fined R25 000 and FSPs Roderick Charles McFarquhar and Gidimag CC were each fined R10 000 for contravening the FAIS Act by marketing and/or advertising the services of foreign-based Safecap Investments trading as Markets.com, which was not an authorised FSP nor a representative of an authorised FSP.

The FSB Enforcement Committee may impose administrative penalties, compensation orders and cost orders on respondents that are found to have contravened any law administered by the FSB.



Suzanne Saunders plays lead role in Digicel's business solutions - Jamaica Observer

DIGICEL Jamaica has tapped Suzanne Saunders to provide strategic leadership for its portfolio of business solutions, one of the fastest growing areas of the company's operation.

Saunders, a former LIME executive, joined the commercial team at Digicel Jamaica in February as Head Business Solutions. This critical area includes the business sales, service delivery and customer support teams, the company said on Friday.

"Digicel is making a major shift, internally and externally. We are moving from being just a mobile entity to a full service provider of mobile services and business solutions. To that end, our Business Solutions team has been restructured to bring together the right skill sets and talents to build a division that will support our customer's needs within the corporate solutions space," said Saunders.

"Our customers expect that we are able to look after them; they're looking for a highly efficient team that can offer then solutions, connectivity and continuity. We have aligned our business to meet the needs of these customer segments and verticals," she added.

Saunders identified the hospitality industry as one of the customer segments that her team will partner with.

"The hospitality industry requires very skilled individuals who know the hotel industry and, in our case, able to support these customers in helping them through cyclical revenues. Cost reduction is foremost in everyone's mind, and our products, services and technology, have to be able to help address the main points for these businesses. Our business has been structured around our customers, and is focused on making the process of doing business with us a productive experience," she said.

Speaking on key projects, Saunders was very passionate about the importance of disaster recovery in the Jamaican environment.

"I cannot stress the critical importance of disaster recovery and protection of vital business data. Businesses are already operating with tight budgets these days, so imagine the financial damage that even one hour of downtime can do to your business, let alone 24 hours," she said, noting "So one of my main focuses, along with my team, is to build greater awareness around our world class data centre and ultimately help all businesses see how disaster recovery through our data centre can help them to eliminate the cost of having to restore lost data, plus lost business."

Opened in 2009, Digicel's Data Centre is the only Tier III-certified facility of its kind in the Caribbean. This certification means that every component of Digicel's infrastructure has the resilience and redundancy necessary to keep its facility fully operational in the event there is a major power system failure, or if the systems need to be taken out of production for planned maintenance activities.

The ICT Business Solutions head also mentioned that based on current discussions, she is confident that some of the key companies in Jamaica will become clients of Digicel's Data Centre over the coming months, in addition to its existing local and regional client base.

Prior to joining Digicel, Suzanne served in several senior commercial roles across a myriad of industries. Among her former roles was Regional Head — Corporate Customer Segment for LIME, where she had responsibility for strategic planning and implementation for their corporate channel.

"I believe that I bring a strong international sales and marketing background to Digicel, having worked within large corporate entities in Jamaica and within the Caribbean region. I have had the experience of working through two major business transformations," Saunders said.

"My experience, in successfully navigating these companies' sales and service teams through these transformations, will be integral to Digicel. It is about making this shift, while still building our revenues, and our business," she added. "My telecommunications background, having been with LIME for six and a half years, brings knowledge of the industry, being with a company that is over 120 years old and a full service provider, to going to a company that is 11 years old, determined, vibrant and passionate about its market share in Jamaica."

Prior to LIME, Saunders served with the GraceKennedy Group at Grace Foods International where she managed the marketing portfolio for 13 countries in the Southern Caribbean.



Cross-border clout still denied to Islamic banks - Reuters UK

SYDNEY | Sun Jun 10, 2012 1:11pm BST

SYDNEY (Reuters) - Established in 2007, Dubai-based Noor Islamic Bank said it planned to become the world's largest Islamic lender within five years, and would consider acquisitions to reach that goal.

But the global financial crisis dented those plans, and today Noor Islamic is focused on its domestic retail and takaful (Islamic insurance) businesses, with much of its overseas activity concentrated in Turkey and Tunisia.

"There are no plans to acquire any operations," chief executive Hussain Al Qemzi told Reuters in an interview. The priority is improving efficiency and cost-cutting, as part of efforts to strengthen the bank's financial position, he added.

Similar stories have played out across the Gulf. Islamic finance is still growing, but a major aspect is missing: the development of big cross-border banks that could spread ground-breaking products and best practice around the region, as multinational banks have done in conventional finance.

Saudi Arabia-based Al Rajhi Bank, for example, moved into Malaysia in 2006 predicting it would have 50 branches there by 2010. It now has about half that number, and a statement by the bank in March said it was focusing on improving operational efficency; it did not stress expansion. Al Rajhi, the largest Islamic bank in Saudi Arabia by assets, has also opened one branch in Kuwait and two in Jordan.

Islamic banks' regional reach generally lags far behind that of big, Western conventional banks operating in the Middle East, such as HSBC Holdings (HSBA.L), and major Arab conventional banks including Jordan-based Arab Bank Group ARBK.AM, which has a presence in 30 countries across five continents.

One exception is Bahrain-based Al Baraka Banking Group, an Islamic institution which has a presence in 12 countries, such as Jordan, Turkey and Pakistan. It plans to expand its network in North African countries, such as Tunisia, where Islamic finance is being promoted by democratic governments that took power after last year's uprisings.

But even Al Baraka has not expanded much in the Gulf; it has no major, permanent presence in that region outside Bahrain. In Indonesia, another centre of Islamic finance, it maintains only a representative office.

MERGERS

Strains in the global financial system over the past few years are one reason for the slowness of Islamic banks to form wide regional networks. But they are not the main reason; after all, the volume of Islamic finance has managed to continue growing rapidly despite, and perhaps because of, the crisis of conventional banking. Islamic financial assets worldwide rose 150 percent over the past five years to around $1.3 trillion, according to an estimate by financial lobby group TheCityUK.

Another factor is restrictions on the entry of foreign banks into many national markets, said Alexander von Pock, principal at consultants A.T. Kearney.

Capitalisation requirements in markets such as Oman and Kuwait limit regional expansion, making it difficult to justify deploying large amounts of capital from already-strained balance sheets, a senior Islamic banker told Reuters. Conventional banks have coped with such obstacles in many cases, however.

The underlying problem, bankers and analysts say, is that Islamic banks tend to be younger than their conventional peers and multiple launches have left the sector fragmented, making economies of scale harder to achieve. Islamic banks now command a 25 percent share of the banking market in the Gulf Cooperation Council, but their average asset base is a third the size of conventional banks, according to Ernst & Young.

Mergers could change this, but Islamic banks have often proved reluctant to merge. In many cases, powerful shareholders have constrained merger plans, fearing loss of control, said Abdul Rahman Mohammed Al Baker, executive director of financial institutions supervision at Bahrain's central bank.

"Look at the nature of the boards...these are family-held businesses," he said.

Last year Bahrain's central bank urged five local Islamic banks to merge early in 2012 as a way to strengthen their capital bases. But in February this year, Bahrain Islamic Bank BISB.BH and Al Salam Bank SALAM.BH ended their merger talks because of disagreement over valuations, while CAPIVEST, Elaf Bank and Capital Management House have not yet achieved a union.

Some mergers in the Gulf have gone ahead. Last month Al Salam Bank and Bahraini Saudi Bank, both Bahrain-based, completed a merger of their operations.

The Dubai government ordered Emirates Bank and National Bank of Dubai to join in 2007, and the combined entity, Emirates NBD ENBD.DU, is now absorbing Dubai Bank, a debt-laden Islamic lender, at the behest of United Arab Emirates authorities.

All these mergers are domestic rather than international, however, and Emirates NBD's takeover of Dubai Bank was viewed primarily as a way to heal a weak spot in the banking system rather than as a step to expand Islamic banking across borders.

FUTURE

In the long term, the rise of large, multinational Islamic banks is inevitable, many bankers say - but it could take many years.

"Ultimately there might be some mergers between small-to-medium sized banks who want to become bigger players regionally," said Salah Jaidah, head of Islamic finance at Deutsche Bank (DBKGn.DE).

Al Baker at Bahrain's central bank said governments should consider offering incentives such as tax exemptions or subsidies in order to entice Islamic banks to merge.

Ultimately, competitive pressures may prove to be the biggest factor encouraging mergers. The margin of Islamic banks' growth above conventional banks' growth has been decreasing across the Gulf, said an April report by A.T. Kearney. Meanwhile, staff expenses at Islamic banks have been growing faster than for conventional banks, according to Ernst & Young.

As Islamic banks finish penetrating their natural customer bases of loyal Islamic banking customers, they may need to seek growth by targeting the "floating mass" - clients who base their choice of bank only partly on religious permissibility, and are also swayed by factors such as pricing and service quality. To attract these customers, Islamic banks may have to compete head-on with the regional networks of conventional banks.

The need for Isalmic banks to become more efficient will eventually outweigh other factors when they consider mergers, said Moinuddin Malim, chief executive of Dubai-based Islamic lender Mashreq Al-Islami.

The rise of regional players will happen when "the industry realises what we are missing," he said.

(Additional reporting by Anjuli Davies; Editing by Andrew Torchia)



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