The Bermuda Monetary Authority has proposed wide-ranging fee increases and new charges for some of its services.

It believes it will need a further 39 full-time staff by 2020 to continue to effectively fulfil its role and expanding mandate, and has projected its annual operating costs to cover the additional staff and other improvements will increase to $61 million by 2020. That is $11.7 million higher than last year.

“It is essential that fee structure for regulated firms be revised,” the BMA states in a consultation paper of proposed fee changes.

The BMA recorded a budget deficit of $1.63 million last year, its fifth annual shortfall in the last decade. It expects to record a further operating loss this year. It has previously covered budget shortfalls from its general reserve account. Last year its reserves shrank by $2.1 million.

As a regulator, the BMA works to protect and enhance Bermuda’s reputation and position as a leading international financial-services centre.

The BMA said it is enhancing its risk-based supervision approach, coverage and service levels; meeting evolving international standards, including those of the Financial Action Task Force; and sustaining equivalence and recognition with the UK, Europe and US. However, in order to continue to meet ever more demanding international standards and expectations, it needs to further enhance its operations and add to its supervisory resources.

One way this can be achieved is by raising fees. In its consultation paper, the BMA noted: “Fee increases have been moderated or not applied in a certain year to reduce the impact on the financial-services industry, especially post the financial crisis. This has, however, contributed to the Authority operating at a deficit, with resultant budget shortfalls being covered from existing reserves.”

With assistance from an international management consulting firm, the BMA undertook a review of its “target operating model”. The consulting firm also studied peer jurisdictions, comparing fees that were charged for comparable services and activities of the BMA, and looked at staffing levels that were needed to effectively perform those activities. It was found that human and financial resource levels at the Authority “are below expected levels given the organisation’s continually expanding mandate and what it will need to achieve in the future”.

Based on the findings of the report, the BMA determined it would need 39 additional staff — to be phased in during next year and 2020 — and projected its annual operating costs would increase to $61 million by 2020.

The BMA stated that this additional recruitment is independent of any new staff required to support the regulatory framework for new digital-asset business that is expected to come to the island. Licensing fees for digital-asset businesses are expected to cover supervision costs for the sector.

Among the BMA’s proposed fee changes are:

• Banks and Deposit Companies Act 1999: a 12 per cent annual fee increase in 2019 and 2020, and application fees to rise from $22,712 to $50,000.

• Corporate Service Provider Act 2012: annual fees increased to $10,000 for limited licences, and $25,000 for unlimited licences (compared to the existing approach of $21 per entity serviced).

• Credit Union Act 2010: annual fee increased from $2,500 to $5,000.

• Insurance Act 1978: annual fees for Class 3A, A and B generally increased by 12 per cent in 2019 and 2020; annual fees for Class 3B, 4 and Group (commercial) generally increased by 10 per cent in 2019 and 2020. Also in this sector, it is proposed to introduce tiers for Class C, D, E and managers, and annual fees “significantly increased” for Class 1, 2, 3, E, special purpose insurers and non-resident insurance undertakings.

• Investment Business Act 2003: annual fees increased by 12 per cent in 2019 and 2020.

• Investment Funds Act 2006: annual fees increased by 10 per cent in 2019 and 2020.

• Money Service Business Act 2016: annual fees increased by 12 per cent in 2019 and 2020.

• Trusts (Regulation of Trust Business) Act 2001: annual fees increased by 10 per cent in 2019 and 2020.

Stakeholders with comments on the proposals have been invited to send in those views to the BMA by September 14.

The BMA stated that the proposed new fee structure has been developed to maintain a balance between its need for additional financial resources to support a “sustainable business model and the ability of regulated firms to absorb fees”.

It said: “The proposed fees reflect the costs of supervision faced by the Authority, and the benefits derived by Bermuda-based financial institutions from the Authority’s world-class regulatory regime and recognition as a leading international financial centre among relevant standard-setting bodies and peer jurisdictions.”