The Financial Sector Forum (FSF) was formally established today upon the signing of a Master Memorandum of Agreement (MOA) by the heads of its four participating agencies - Governor Rafael B. Buenaventura of the Bangko Sentral ng Pilipinas (BSP), Chairperson Lilia R. Bautista of the Securities and Exchange Commission (SEC), Commissioner Eduardo T. Malinis of the Insurance Commission (IC) and Mr. Ricardo M. Tan, President of the Philippine Deposit Insurance Corporation (PDIC).
The FSF is essentially a voluntary cooperative endeavor of the concerned agencies to provide an institutionalized framework for coordinating the supervision and regulation of the financial system, while preserving each agency’s mandate. It will also be a venue for the agencies to update each other on the latest developments in their respective industries and any concerns that may have systemic repercussions. The enhanced coordination arrangements will improve supervision over the activities of financial conglomerates as well as coverage of entities that operate in the grey areas of supervisory boundaries.
The FSF is not intended to be a regulatory superbody since it is not vested with any powers. However, understandings reached by the Forum are expected to be implemented by the member agencies in the interest of enhancing the overall supervision process.
The FSF is not the first step that the agencies have taken to address the need for coordination in order to effectively carry out their mandates. There are already existing bilateral MOAs between the BSP and PDIC for information sharing, and between the BSP and the SEC for the holding of joint examinations and the referral of findings, while a MOA between the BSP and the IC will be adopted shortly. These bilateral arrangements are quite specific in nature given their operational focus. They will continue to be relevant and necessary alongside the FSF multilateral framework of cooperation.
The work of the FSF will be focusing, on an ongoing basis, on three broad areas. The first of which is harmonization and coordination of supervisory and regulatory methods and policies. The Forum is committed to identifying and filling in the gaps and eliminating overlapping functions in the current supervisory regime. It is likewise concerned with adopting a common supervisory approach to similar activities in order to reduce regulatory arbitrage.
The second thrust of the FSF is reporting and information exchange and dissemination. Efforts on this end would include developing comprehensive rules on disclosure to enhance transparency of firms, harmonizing regulatory reporting requirements to lighten the load of supervised institutions, and creating database linkages between the agencies to facilitate a speedier and more accurate transfer of information.
Lastly, the FSF will undertake initiatives on consumer protection and education in order to curb the proliferation of unlawful and unethical business practices as well as various financial scams.
In carrying out its mandate, the FSF will be guided by recommendations of international standard-setting bodies such as the Basel Committee, the International Organization of Securities Organizations, and the International Association of Insurance Supervisors.
All told, the FSF is expected to contribute to a more robust and stable financial system given the more efficient allocation of regulatory resources, reduced regulatory burden on supervised institutions, and enhanced awareness on the part of the public.