Unauthorised financial advisers must face action: QFC authority

By Santhosh V Perumal/Business Reporter

Financial advisers, who operate without proper authorisation, ought to face action, a top official of the Qatar Financial Centre Regulatory Authority (QFCRA) has said.

“We are liaising with local authorities on actions that may need to be taken to protect customers,” QFCRA CEO Michael Ryan told the 7th GCC Regulators Summit, which began in Doha yesterday.

The regulatory framework is “critical” when it comes to addressing effectively cross-border issues and obtaining and sharing information, he said, adding there are several issues of common concern to regulators where an ongoing and open dialogue is of invaluable assistance.

“One example of this is the issue of financial advisers who operate without the appropriate authorisation in a jurisdiction or, in the conduct of their businesses, exceed their scope of permitted activities; that is an issue that is usually highlighted by customer complaints, and the QFCRA has been made aware of number of such firms who may be operating in such a manner,” he said.

Cross-border co-operation and establishing a clear framework for assistance and information sharing among regulators are essential as the financial sector continues to internationalise and building that network of international relationships will continue to be a focus for the QFCRA, according to him.

Spelling out the strategy for 2013, Ryan said effective from July this year, the QFCRA will introduce rule changes to strengthen the role of corporate governance to ensure that there are strong risk management frameworks in place at the firms it regulates and compensation policies to prudent risk taking.

“We will also be reviewing the prudential regulations for the insurance companies to ensure alignment with international developments on capital, liquidity and risk management, in particular insurance core principles,” he said.

Highlighting that the importance of macro-prudential analysis is further reinforced by the establishment of the Financial Stability and Risk Control Committee (FSRCC) under the new Qatar Central Bank law; he said it lay foundation for increased co-operation between the regulatory bodies in Qatar as the country develop and apply regulatory policy and implement international standards and best practices.

“The Qatar Financial Market Authority and the QFCRA remain independent regulators under their respective laws but with the establishment of the FSRCC, we will have a formal structure for co-ordination in place, which will advance the objective of creating a consistent and co-operative regulatory environment within the country,” he said.

The global financial crises has prompted a thorough review of financial regulation and supervision across the world and considerable work will continue to be directed at ensuring that it positions its firms as well as the authority to meet new and evolving international standards, he said.

“We will also continue to focus on building our macro-prudential capabilities, which has been an institutional focus over the last couple of years. This is important to ensure that we have the tools available to identify and assess critical changes in the risk profile of financial sectors (banking, insurance and asset management) as well as to identify the macroeconomic factors affecting the financial markets and firms,” he said.

On the US Foreign Account Tax Compliance Act (FATCA) — which will affect all financial institutions that open accounts and hold assets for US persons, retail and commercial banks, insurance companies and asset management firms, he said the QCB, QFMA and QFCRA have been proactively addressing it.

During 2013, he said, the QFCRA will also look at “redesigning” its prudential returns to ensure that the data it collects from firms are targeted at the most relevant risk factors and metrics, and aligned with the evolving landscape of IFRS and Basel III.

IFRS changes have been and continue to be fairly broad with a keen focus and urgency in the areas of financial instruments, impairments and special-purpose entities, all of which directly impact on financial services firms, according to him.