Financial regulator the Bermuda Monetary Authority today announced a joint initiative with industry representatives and the Pensions Commission aimed at improving disclosure practices among Bermuda pension providers and investment firms.

A working group including many of the top local financial firms is to review and revise the existing code of conduct issued under the Investment Business Act 2003 (IBA).

The move comes in a difficult year for the financial services industry, which has seen the BMA instigate the winding up of local investment firm Emerald Financial Group and the Bermuda branch of the British American Insurance Company.

The BMA wants firms to ensure that customers are given more information by companies to help them make informed investment decisions.

The General Business Conduct and Practice Code of Conduct for investment providers was published in 2004. It provides general guidance to investment providers — whether dealing with personal or institutional investments, including pension funds — as to their conduct in dealing with clients, covering such areas as avoiding misleading or deceptive representations; avoiding or disclosing conflicts of interest; providing periodic information/performance reports; disclosure of remuneration and commissions; and generally helping clients to make informed investment decisions.

“Our goal is to incorporate more explicit guidance as to the form and content of information investment firms and pension providers give to their clients,” BMA CEO Matthew Elderfield said in a statement yesterday.

“This development is consistent with good international practice in that it seeks to place higher standards of disclosure on pension providers and investment firms generally to make sure individuals receive clear information about where their money or pension funds are invested, the performance of their investments, the various fees they are charged and the impact that has on their investment returns.

“We want to be sure our regime for investment firms and pension providers remains in line with best international practice, as well as being effective and practical for the Bermuda market. We also want to ensure firms are absolutely clear about the Authority’s expectations in terms of their obligations and conduct in relation to their clients.”

With that in mind, the Authority has established a working group with the aim of implementing an enhanced code of conduct by the second quarter of next year.

A draft of the code will be published for wider consultation before being issued in final form. The Authority anticipates that the review by the working group will be completed by January 2010, with a consultation paper being published to the market by the end of March.

“As with any regulatory development the Authority undertakes, consultation with the market will be part of this initiative,” said Graeme Dargie, Director, Banking, Trust and Investment at the Authority. “In this instance, we want to work directly with the industry to help achieve our aim of providing better protection to investors.”

Peter Sousa, CEO of the Pensions Commission of Bermuda said: “With respect to private, occupational pension schemes established under the National Pension Scheme (Occupational Pensions) Act 1998, the importance of providing complete and transparent information upon which plan sponsors and plan members can make intelligent decisions cannot be overstated. The Pension Commission supports the Authority’s initiative in this regard and is pleased to be able to work with it and the industry representatives in enhancing its Code of Conduct.”

The firms represented on the Working Group include the Argus Group, Bermuda Investment Advisory Services (BIAS), Butterfield Bank, Capital G Group, Colonial Group, Freisenbruch-Meyer Group, First Bermuda Group, HSBC Bank, Kast Investment Management, and BF&M Group.