Financial sector cleanup: Securities and Exchange Commission in Ghana says Insurance, Security sectors are next

The Director-General of the Securities and Exchange Commission (SEC), Daniel Ogbarmey Tetteh disclosed this while speaking at Ghana Re’s 10th Cedant Awards on Friday, September 13, 2019, in Accra.

In his speech, he noted that “the impact of standardization and supervision on the financial sector in Ghana”, he stated: “All the sectors have undergone various reforms and are still going through shake-ups as the present or latest clean-up of the banking sector alludes. We understand that insurance is also going to follow suit, so is the securities sector.”

Adding that, “Because of the sectors’ separate development path, each is placed under separate regulatory agencies to oversee their respective developments and regulation. This has given rise to intense debate as to whether we should continue to follow our separate regulatory and development paths or whether it is time to converge.”

Contagious risks

The SEC Director-General further noted that the increasing inter-connectivity amongst and between the four sectors in the financial industry – Banking and the Money Market; Insurance; Pensions and Securities or the Capital Market – has brought along contagious risks if not systemic risks that ought to be dealt with collectively.

“For instance, the present crisis in the banking sector starkly revealed that inter-connectivity. The Asset Management segment of the Securities Industry has been impacted negatively in view of the fact that most asset managers executed their fixed income mandates by placing huge amount of funds in the time deposits of affected banks, savings and loans and microfinance institutions under the supervision of Bank of Ghana,” he said.

Risk of impairment

He said “the revocation of the licence of such institutions by the central bank has put investors’ funds under serious risk of impairment. It is conceivable that Pension Funds and Insurance premiums placed with some of such financial institutions were not unaffected. This implies that if regulators in the industry were to share information on their respective regulated institutions, some of this counter-party risk defaults could have been better managed.”