Financial institutions and financial services under the Mauritian laws.

The definition of what is meant by the above expressions should be considered because the various enactment define those terms in various ways. This creates, in practice, a lot of confusion in the practitioners’ mind. Both the Banking Act 2004 and Financial Services Act 2007 and other related enactments have provided for a definition of banking financial services and non-banking financial services with their respective regulatory body namely the Bank of Mauritius and the Financial Services Commission.

The exercise below shows that a lack of consistency ascribed to the expressions ‘Financial Institutions’ and ‘Financial Services’ which have been created under various enactments. It creates confusion and as at date we have no local case law which has ever probed into that matter though the banking financial services and non-banking financial services are beyond their stammering stage.

What are financial institutions?

The Banking Act 2004 defines a financial institution as any bank, non-bank deposit taking institution or cash dealer licensed by the central bank. The Financial Anti Money Laundering Act defines a financial institution as an institution, or a person (meaning a corporate person and not an individual), licensed or registered or required to be licensed or registered under – (a) section 14 or 77 of the Financial Services Act; (b) the Insurance Act; or (c) the Securities Act. The Prevention of Corruption Act (POCA) under its interpretation clause stipulates as follows: “Financial institution” means an institution or person regulated by – (a) the Financial Services Act 2007; (b) the Immigration Act in so far as it relates to section 5A; (c) the Insurance Act; (d) the Securities (Central Depository, Clearing and Settlement) Act; (e) the Securities Act 2005; (f) the Trusts Act 2001; and (g) the Unit Trusts Act.

The Prevention of Terrorism Act (POTA) defines a financial institution as any institution or person regulated by the Financial Services Act 2007, The Financial Services Act does not define a financial institution but speaks of “any licence” – issued under any relevant Act; and except where otherwise specified, includes – (i) a Category 1 Global Business Licence; (ii) a Category 2 Global Business Licence; or (iii) a management licence. It also speaks of the expression “licensee” (a) means the holder of a licence; and (b) includes – (i) any person authorised, registered or approved under the relevant Acts; and (ii) any institution established to provide any service under the relevant Acts.

The Securities Act 2005 does not define a financial institution but simply stipulates that financial institution includes – (a) a bank licensed under the Banking Act 2004; and (b) a corporation licensed by the Commission, other than a management company or a company licensed to conduct global business.

What are financial services?

They refer to facilities which are regulated by both the Financial Services Commission and the Bank of Mauritius: savings accounts, leasing, money transfers, checking accounts, stockbroking and insurance among others which are offered by banks, credit unions, stock brokerage firms, insurance firms, and foreign exchange among others. Financial services are many, wide and varied hence many institutions or organizations are involved in offering them. Other well-known financial services include debt resolution, private equity, and intermediation venture capital conglomerates as well as both private and public equity. Financial services in general relate to all those issues which affect the circulation of money and how they interrelate.

The Financial Services Act 2007 does, however provide for a definition of financial services which is stipulated as follows: Assets Management, Credit Finance, Custodian Services (non-Collective Investment Scheme), Distribution of financial products, Factoring, Leasing, Occupational Pension Scheme, Pension fund administrators, Pension Scheme Management, Retirement Benefits Scheme, Superannuation Funds, Registrar and Transfer Agent, Treasury Management and such other financial business activity as may be specified in Financial Services Commission Rules. It is not easy to define the legal framework for the above subject, given that financial services law is not codified as obtained for the civil code, code de procédure civile or the code de commerce. Could our Law Reform Commission consider the opportunity to look into whether there would be room to have a ‘Code of Financial Services’ in a near future?