Regime changes in the aftermath of the global financial crisis as the international community undergoes a major overhaul of regulatory standards across all the sectors was one of the key talking points at the Bermuda Monetary Authority’s (BMA) Annual Meeting held yesterday.

The BMA said it intends to continue monitoring such developments, which will impact jurisdictions across the world, including Bermuda, during 2010, while contributing to the ongoing debates on regulatory reform via its participation in the work of international standard setting bodies.

Other areas of focus included preparing for insurance regulatory equivalence, building on effective resources for supervisory programmes and a further emphasis on consumer protection and were keenly debated by Jeremy Cox, the BMA’s newly appointed CEO, along with members of his executive team at the presentation of the Authority’s 2010 business plan.

“Our insurance regulations are well-placed for changes in international insurance standards due to our work preparing for broad equivalency under Solvency II,” said Mr. Cox.

“With respect to our banking sector, Bermuda’s banks are relatively well prepared for changes we expect from the Basel Committee of Banking Supervisors, which is working to raise global standards particularly as they relate to capital adequacy.

“Since the banks are already required to maintain capital levels above the international standard we believe they are in a strong starting point to meet any new regulations coming out of Basel.”

Graeme Dargie, director of banking, trust and investment at the Authority, said: “We will be monitoring these developments closely with a view to revising Bermuda’s capital framework appropriately and as necessary to reflect the new international standard.

“Changes are also anticipated in relation to international standards for bank liquidity. We also intend to review our liquidity policy for Bermuda’s banks this year, looking at all aspects of liquidity risk and management across institutions, and consulting with the market on any proposed changes.”

The BMA said it believed the most dramatic changes to financial regulation would be in the funds sector – an area in which there were previously no international standards, and that through its participation with the International Association of Securities Commissions as well as liaising with other effected jurisdictions, it would be actively working to ensure Bermuda’s fund regulation meets the new standards.

The business plan, which sets out the BMA’s priorities and action plan for the next 12 months and is in its third year of publication, was discussed between local stakeholders from the public and private sector and the Authority’s executive management.

Achieving regulatory equivalence, or mutual recognition, for the Island’s regulatory framework with other key jurisdictions remained top of the agenda for the BMA for 2010, primarily with commercial insurers under Europe’s Solvency II Directive.

Craig Swan, director of policy, research and risk assessment at the Authority, who is leading the BMA’s Solvency II-related initiatives said: “This year we plan to focus on particular framework developments under Pillar 2 of the Directive, covering qualitative review of risk management both by companies and supervisors. We will be conducting extensive consultation with (re)insurers about the related enhancements to Bermuda’s regulatory framework.”

Highlights of those changes included progressing work on establishing a group-wide supervision framework for Bermuda’s largest insurers, involving further development and implementation of the supervisory processes the Authority intends to apply to Bermuda-based insurance groups with global operations.

The Authority also announced that it intends to set a series of Own Risk Solvency Assessment requirements, under which the Island’s large commercial insurers will provide their own assessment of their capital needs, taking into account the risks they are exposed to and how to mitigate them, as well as introducing an Insurance Code of Conduct this year.

Mr. Cox said: “Ensuring we have the right people with the right skills will be key to maintain our effectiveness as Bermuda’s financial services regulator, particularly as we seek to address critical framework enhancements such as implementing group supervision. We have placed strategic focus on our operational effectiveness for some time now, and this will continue throughout 2010.”

The BMA, meanwhile, plans to place further emphasis on the issue of consumer protection with specific supervisory regime enhancements, as well as outreach activities, in the wake of challenges experienced last year in the local market that had direct impact on a number of retail consumers of financial services.

Key initiatives in the 2010 plan under consumer protection will include the establishment of a Deposit Insurance Scheme for the banking sector, and a revised Code of Conduct under the Investment Business Act 2003 for the investment sector. The Authority will also be enhancing its intervention powers with respect to banks. A copy of the BMA’s business plan is available on its website at www.bma.bm.