BMA Stakeholder Letter - Consultation Paper: Proposal for a Conduct of Business Regulatory Regime (2021-04-23)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority summarising feedback received on its December 2020 Consultation Paper proposing a Conduct of Business Regulatory Regime, and setting out the Authority's responses to key issues raised. It is an informational update on the consultation process rather than a binding rule, and confirms the Authority's intended next steps for embedding conduct of business standards through sector-specific codes.

• Legislative change: The Authority intends to put forward a bill this year to amend the Bermuda Monetary Authority Act 1969 to give it statutory remit to oversee conduct of business for customer protection.
• Sector approach: The Authority will address conduct principles sector by sector, starting with insurance and banking, and will issue separate consultation papers later in the year proposing amendments to the existing insurance code of conduct and a new code of conduct for banks.
• Transition period: A transition period will be proposed to allow licensees and registrants time to embed new policies, processes, internal controls and systems needed to comply with revised codes.
• Retail versus non-retail treatment: Overarching principles will apply to all customers, but a risk-based, proportionality-based application will continue for non-retail relationships; portions of codes applying only to retail business will be indicated as in existing codes.
• Cross-border scope: Conduct of business amendments will be applied like other code provisions using an outcomes-based approach; at minimum, licensees and registrants must comply with the Authority's requirements even if also meeting a higher foreign standard.

No new binding requirements are created by this letter itself; it signals forthcoming legislative amendments and sector-specific consultations that will introduce or revise codes of conduct for insurance and banking licensees, with further consultation and a transition period to follow.

Key obligations

• Registrants and licensees must, at a minimum, comply with the Authority's conduct of business requirements as set out in the relevant codes, regardless of any higher standard met in a foreign jurisdiction.

Applies to

insurance licensees, banks, registrants under BMA-supervised sectors, financial institutions

Deadlines

• later half of this year (2021): Authority to issue separate consultation papers proposing amendments to the insurance code of conduct and a new code of conduct for banks
• this year (2021): Authority intends to put forward a bill to amend the Bermuda Monetary Authority Act 1969