Consolidating the notion of trust in the financial services industry

The Mauritius financial industry has recently taken some hits on its reputation as an international financial centre. As an industry, we need to stay calm and reassure our investors. The need for a revisiting of our financial services sector model dates back well before the recent events. We now have an opportunity for reassessing, re-defining, re-inventing and repositioning our financial services industry. We should begin by asking numerous pertinent questions, limitations and lessons revolving around issues affecting the sector. After the storm comes a calm silence, a silence for reflection, an opportunity to rise from obstacles and face challenges in a wiser and more strategic manner.

The financial services sector of Mauritius was built for the past 25 years on elaborated plans to aspire as a secure, transparent, vibrant and innovation-driven jurisdiction to further enhance competiveness and create economic growth. The recent series of events evoke an urgent public relation and communication strategy that needs to be elaborated to repair and consolidate the reputation of Mauritius as a secure financial destination. As the cornerstone, this sector is built on the values of credibility and confidence, and the authorities, financial institutions and regulatory bodies will have the hard task to promote and attract potential international investment. Given that all the events are happening in a very short period of time allow us to quickly rebuild our reputation as opposed to having a series of events over a long spell of time.

Moreover, Mauritius competing to secure a position as an international financial centre in the world, trust as complex variable heart of investment is an ultimate challenge.  Trust matters for investors and trust as a complex investment variable will be founded on elaborated, bold and attractive branding investment concept. Trust will bridge the link between investors and the economy, which will trigger the consciousness of reputation management and risk. While it is impossible to change the course history, it is more practical to improve reputation by sowing the seeds of trust in the future. 

Why the optimism? We have witnessed the revival of the Financial Services Consultative Council, the resurrection of the Financial Services Promotion Agency, the creation of Financial Services Institute for capacity building, incentives to encourage wealth and fund management. Moreover, we have several legislations that should quantum leap us in the value added services we offer as financial jurisdiction. Some of the recent ones are:  The Foundation Act passed in 2012 provides the opportunity to form a Foundation on a charitable and non-charitable (or both) for the benefit of a person.  A Foundation can have a Global Business License (GBL) under the Financial Services Act 2007 in order to be operational, the Captive Insurance Act is an insurance act passed in 2005 and amended in 2007 implies that an insurance company only insures part or all part of risk carried on by a corporation in Mauritius whose business is restricted substantially to risk outside Mauritius with affiliated companies. The Public Private Partnership is a relatively new concept in Mauritius.  In the last Budget, the government emphasized mostly its intention in engaging in Public Private Partnership for development and investment from an economic and social stand point, the Public Private Partnership Act implies various contracting opportunities and responsibilities in order to enhance and public and private collaboration. Finally, The Limited Partnership Act was passed on 2011 with an objective to regulate and bring the necessary characteristics that englobes the formation of a limited partnership requiring one or more general partners.  The subject to Limited Partnership Act is subjected to those holding a Global License complying with the Financial Act 2007 and Securities Act 2005. 

As a player, we should be taking up the challenge to elevate and promote our jurisdiction as an international financial centre through value addition, product development and market diversification, research, capacity building, marketing and promotion. 

Communication and reputational management are essential challenges to face in this current context and the authorities have started working on renewing and revising responsibilities of financial institutions and regulators.  The amendment of the Insurance Act is a first step in reinforcing and reforming the financial institutions in Mauritius.  With a dedicated Ministry for the Financial Services Sector, bestowing the power to supervise the Financial Services Commission, introduce and amend the relevance of the financial legislatures, promoting the sector and innovate for growth. 

The amended Financial Services Act requires for the Financial Services Commission to exercise more effective supervision over related companies of an insurer, that the Minister may request the FSC to appoint a special administrator where he is satisfied, on the basis of a report submitted by the Commission, that the liabilities of an insurer and any of its related companies exceed its assets by at least Rs 1 Bn and that such excess is likely to be a threat to the stability and soundness of the financial system of Mauritius; and finally for the transfer of undertaking, in whole or in part, of an insurer and any of its related companies to another insurer and any of its related companies approved by the Minister. Such amendments reveal relevant decisions and institutional actions in times of crisis.