Consultation Paper: Conduct of Business Regulatory Regime - Banks and Deposit Companies Code of Conduct (September 2021)

Summary

This is a Bermuda Monetary Authority consultation paper seeking feedback on a proposed new Code of Conduct for banks and deposit companies, to be issued under a new section 8A of the Banks and Deposit Companies Act 1999. It builds on a December 2020 consultation and attaches, as Appendix I, the full draft Code setting out conduct of business standards for licensed deposit-taking institutions.

• Scope: The draft Code would apply to all institutions licensed under section 14(5) of the Banks and Deposit Companies Act 1999, applied proportionately based on each institution's nature, scale and complexity.
• Core aims of the draft Code: Institutions would be required to treat customers fairly and equitably, communicate clearly and not misleadingly, protect customer assets from fraud or misuse, handle complaints fairly and promptly, and ensure customers understand their responsibilities.
• Draft Code content areas: The attached draft covers compliance with law, integrity and ethics, conflicts of interest, handling of customer information, internal management controls (outsourcing, record keeping, staffing, systems, suitability), disclosure and terms of business, lending, vulnerable customers, complaints, communications and statements, advertising, licence disclosure, and cooperation with regulators.
• Consultation process: BMA invites licensed institutions and other stakeholders to submit written comments on the draft Code to conduct@bma.bm; feedback will inform amendments before a finalised Code is issued, expected by the end of 2021 alongside related amendments to the Act.

As a consultation paper, this document does not itself impose binding obligations; it signals the Authority's intent to formally adopt a Code of Conduct once the underlying Act amendments and stakeholder feedback process are completed.

Key obligations

• Licensed institutions and other stakeholders wishing to comment must submit their views to conduct@bma.bm no later than close of business on 25 October 2021.
• Once finalised, the draft Code would require institutions to establish documented policies on customer due diligence, new customer acceptance, conflicts of interest, outsourcing oversight, record keeping, complaint handling, and customer communications and statements.
• Once finalised, institutions would be required to publish their licensed status on their website and disclose it in advertisements and correspondence, and to proactively notify the Authority of material business changes or developments.

Applies to

banks, deposit companies, institutions licensed under section 14(5) of the Banks and Deposit Companies Act 1999

Deadlines

• 25 October 2021: Deadline for licensed institutions and stakeholders to submit comments on the consultation paper and draft Code of Conduct to conduct@bma.bm.
• end of 2021: Anticipated timeframe for the Authority to finalise and issue the Code following amendments to the Banks and Deposit Companies Act 1999 and receipt of consultation feedback.