Insurance companies who fail to pay annual fees on a timely basis to the Bermuda Monetary Authority will now be subject to penalty charges under regulations approved by the House of Assembly.

The Bermuda Monetary Authority (Regulatory Fees) Amendment Act 2010 extended the Authority’s power allowing it to charge ten percent of the prescribed fee for each month that fees remain outstanding. It also gave the Authority the ability to recover unpaid fees as a civil debt in any court or competent jurisdiction, if required.

Premier and Finance Minister Paula Cox told the House on Friday: “It is important that fees are paid on a timely basis and this measure will hopefully be the incentive for timely payment of fees by all registered entities.

“Recognising the sensitivity to fee increases during this period and the impact they can have on Bermuda’s competitiveness, the Authority anticipates funding a portion of its operations using deficit financing again in 2011, thereby allowing fee adjustments to lower levels than otherwise would be required.”

The Authority will continue to assess the cost of regulation and develop an appropriate fee schedule that reflects the challenges it faces, she added.

Shadow Finance Minister Bob Richards said the “massive increase” in penalty fees would boomerang back and hurt the pockets of everyday Bermudians.

He said: “We have these insurance companies that are in our lives and in our pockets and they are going to be more in our pockets because of what we have here today and I do not think that is right. To me that is nonsensical and needs to be changed.”

He said the Authority was being handed more and more cash, but the public wasn’t being told where these funds were going.

“The Bermuda Monetary Authority has become a black hole in Bermuda because all this money is going in there and the public has no idea what is happening with it.”

He said the Authority was much too independently regulated and had become above public scrutiny and accountability.

He claimed this was not the case in other countries, which Bermuda has tried to emulate.

“In Bermuda we have an independent regulatory body, and no representative of the people in Bermuda has a clue of what is inside the Bermuda Monetary Authority.”

While he said the Authority published an annual report, he said this “wasn’t good enough” for the people.

“There must be public oversight. I have to urge the Minister, and now the Premier, that if she is not prepared to answer legitimate questions then an oversight committee (be created) with members of this parliament to exercise powers over the monetary authority.”

Opposition MP Patricia Gordon Pamplin said in the past two years there has been a large number of fee increases and said: “The (Authority) is going to the same well over and over again.”

She said Government needed to look at whether it was getting the best value for money and whether efficiency could be used to “deal with those exponential and in some cases extortionate fines in order to fund the Bermuda Monetary Authority and keep its head above water”.

Ms Gordon Pamplin said she was not convinced about the extent to which Government continued to ask the insurance companies, in particular, to fund the Authority.

She added: “Government must make demands with the BMA and say we cannot fund you without everyone doing the kind of belt tightening that is necessary.”

She said if there was an account where she could put her money in and get a ten percent return each month she would give every cent she had.

The Premier responded to comments from the opposition members and said: “We have to be pragmatic and the bottom line is the Bermuda Monetary Authority as an independently regulatory (body) has a pivotal role to play and we have to look at the mischief we are trying to cure.”

Ms Cox said she enjoyed that the final bill created so much emotion and excitement, but added “The bottom line is part of the regular framework for it to be robust, credible and sustainable there is a need to augment the fees.”