Legislation, Standards & The Finance Services Industry

Legislation, Standards & the
Finance Services Industry
The impact of legislation and Standards on the

Finance Services Industry
Road Map
• Local Legislation Impacting the Financial Service

Industry
• International Standards affecting the financial
services Industry
Local Legislation Impacting the
Financial Service Industry
Key Terms
• Legislation is law which has been publicised by a

legislature or other governing body or the process of
making it.
• Financial services refers to services provided by
organizations that deals with management of money.
The Financial Service Industry
The Different Laws Affecting The Financial Service Industry In Jamaica
• Agent Banking Regulations
• Casino Gaming
• Privatisation and Public-Private Partnership
• Public Sector Governance

• Tax
• Credit Bureau Act

Agent Banking Act
• The Banking Services Act was passed in June 2014, but did not
take effective until 30 September 2015.
• This Act repealed and replaced the former Banking Act,
Financial Institutions Act and Bank of Jamaica Regulations
which governed the regulation and supervision of deposit-
taking institutions.
The Purpose of the Banking Act
• In accordance with Bank of Jamaica Act (1960), the

conduct of monetary policy is aimed at regulating the
growth of money and credit in line with the resources
expected to finance economic activity and generate
employment, without undermining the conditions of
price stability.
Casino Gaming Act
• The Casino Gaming commission of Jamaica was

created in 2010 when the Casino Gaming Act was
introduced.
• The Commission also licenses and regulates all
gaming activities in Jamaica.
Purpose of The Casino Gaming Act
• The purpose of this act is to maintain a strong

regulatory environment
• This in keeping with the more established and
reputable gaming jurisdictions around the world.
Privatisation and Public-Private Partnership Act
• On October 13, 2011 The government of Jamaica

established a Public-Private Partnership Authority Act.
• It is designed to improve Public operational efficiency and
environmental performance, promote public safety, attract
private investment in the state, and minimize governmental
liabilities.
What's the purpose of the Public Private Partnerships
(PPP)?
• Public Private Partnerships Improvements in a country’s
stock of infrastructure is the heart of growth and
development.
• It helps with narrowing the gap between the government
private sector by encouraging partnerships.
Public Sector Governance
• Good governance in the public sector is the cornerstone for

efficient and effective organizational performance and is
underpinned by a number of accountability requirements.
• Systems and structures for governance need to be supported
by effective leadership and organizational culture.
Income Tax Act
• Tax Administration Jamaica (TAJ) administers the

Income Tax Act in respect of audits and assessments.
• It ensures that all the requirements of the Act are
adhered to, and all taxpayers shoulder their fair share of
the tax burden.
Different Taxes in Jamaica
Credit Bureau Act
• An Act to provide for the regulation of certain credit bureaus, the

credit reporting business, and certain members of these credit
bureaus.
• To whom the credit bureaus provide customer information, and for
matters connected with any of these,
• It also makes related and consequential amendments to certain other
Acts.
International Standards affecting
the financial services Industry
What are Standards?
• Is a repeatable, harmonized, agreed and

documented way of doing something.
• Something used as a measure, norm, or model in
comparative evaluations.
Why do they Matter?
• They help with improving consistency & performance.
• Facilitates business interaction.
• Enables companies to comply with relevant laws and

regulations.
• Promotes transparency and accountability
Scope
• There are many standards that are established in the

financial services industry.
• Standards covering each sectors/aspects of operation within
financial institutions.
• We will be focusing on the accounting standards that affect
the FSI internationally.
Accounting Standards Intro
• They are guidelines used for accounting
• Help to keep accounting practices consistent and

understandable across all companies and industries.
• Are rules and guidelines set up by governing bodies, like:
– FASB (US GAAP)
– IASB (IFRS)
Accounting Standards Around the world
• Accounting standards tend to be based on Geography.
• Financial institutions in the USA follow standards that

are issued under the US GAAP framework of standards.
• Most of the rest of the world uses IFRS.
US GAAP vs. IFRS
GAAP IFRS
Accounting Basis
- Rule Based, often times more detailed - Principle Based - accounting practices
and prescriptive are more flexable
Adoption
- More countries are adoprting IFRS or

- Use of GAAP generally on the decline
some version of it
Inventory Accounting: LIFO - Last In First Out vs. FIFO - First In First Out
- LIFO Forbidden under IFRS in Favour of

- LIFO allowed under US GAAP
FIFO
US GAAP vs. IFRS cont'd
GAAP IFRS
Required Documents for Financial Accounts
Required to compile and publish a:
• balance sheet,
• Companies that report under IFRS are
• income statement,
required to compile and publish the same
• changes in equity document,
except for statements about
• statements about comprehensive income
comprehensive income.
• cash flow statement
• and all associated footnotes.
Other Bodies of International accounting standards
• I.A.S. - International Accounting Standards:

– no longer issued (since 2001) but remnants of which exists as part of the IFRS.
– when contradictory standards are issued, older ones, ie. IAS, are usually
disregarded.
• S.S.A.P. - Statements of Standard Accounting Practice:
– are edicts by which trading companies that are listed on the stock market must
adhere to when constructing their financial reports.
– They form part of the Generally Accepted Accounting Practice.
Laws of Principals and Agents
The Principal-Agent relationship
and some of the laws/principles that govern them
The Principal-Agent Relationship
• A principal-agent relationship is formed when one person

authorizes another to perform some sort of task on their behalf.
• The person granting the authority is called the “principal”,
while the person performing the task is called the “agent”.
• The entire relationship is usually called an “agency relationship
”.
The law of agency
• The law of agency is an area of commercial law that deals with

the set legal matters concerning the principal-agent
relationship.
• The relationship can also involve the agent acting on behalf of
the principal to create legal relations with a third party
• In such relations the agent is essentially required to bring the
principal and third parties into contractual relationship
Laws/Principles Governing the Principal-Agent
Relationship - Liability
• Liability of agent to principal: If the agent has acted without actual authority, but
the principal is nevertheless bound because the agent had apparent authority, the
agent is liable to compensate the principal for any resulting loss or damage.
• Liability of principal to agent: If the agent has acted within the scope of the actual
authority given, the principal must compensate the agent for payments made during
the course of the relationship whether the expenditure was expressly authorized or
merely necessary in promoting the principal's business.
Relationship - Duties
• An agent owes the principal a number of duties. These include:
– a duty to undertake the task or tasks specified by the terms of the agency;
– a duty to discharge his duties with care and due diligence;
• An agent must not accept any new obligations that are inconsistent with the duties
owed to the principal.
• An agent can represent the interests of more than one principal, conflicting or
potentially conflicting, only after full disclosure and consent of the principal.
Relationship – Duties cont’d
• An agent must not usurp an opportunity from the principal by
taking it for himself or passing it on to a third party.
• In return, the principal must make a full disclosure of all
information relevant to the transactions that the agent is
authorized to negotiate.
The Obligations of Financial
Services Advisors
Financial Services Advisors & Their Obligations
• They provide strategic advice across a variety of financial products and

services (debt management, cash management, insurance coverage,
investments)
• Assess client’s overall financial picture, understand their needs and
develop a solid financial plan
• Guide clients towards a profitable and secure financial decision
• Cultivate client base and build good business relationships

Financial Services Advisors & Their Obligations cont’d
• Keep abreast of new industry’s trends and research market to

back up financial consulting
• Oversee the course of the financial plan and update it, if
necessary, to ensure profits
• Comply with all industry rules and regulations
• Liaise with providers, solicitors, valuers and other professionals
Cash Handling And Storage
Procedures In The Financial
Industry
What is cash
• Cash is money in the form of coins or notes
• This is distinct from cheques, money orders or credit.
• Even though many business are switching from the use of

physical cash there needs be a certain standard to the handling
and storage of cash
Cash handling procedures and storage
• Standardize a Process
– Everyone needs to be on the same page when staff is handling cash on your small
fleet. Putting together a one-size-fits-all set of rules takes the guesswork out of
handling cash for employees that work autonomously.
• Eliminate Slush Funds
– Cashiers in small retail stores are often expected to make up for shortages from
their own pockets. This can lead to an employee slush fund to pool resources. It’s
generally a bad idea that can hide the real reason the drawer goes short. If you use
one of these, get rid of it.
Cash handling and storage procedures continues
• Have a Petty Cash Account
– Having some petty cash on hand to make change for customers in your business makes for a great
competitive advantage. Opening a business checking account to fund one keeps your bookkeeping
above board.
• Issue Invoices
– It’s not a problem when regular clients want to pay in cash at your nail salon. You only need to
issue them an invoice.
• Limit the Employees Who Handle Cash
– Effective cash management starts with assigning the responsibilities to supervisors. They should
be responsible for reviewing transactions and other duties like recording receipts.
• Concentrate on Counting
– You might even be a sole proprietor on a busy food truck. If you’re handling cash
transactions, you need to concentrate. If you get interrupted, always start over
again from the beginning when counting.
• Count in Private
– Security is always a number one concern for a small business that owns vending
machines. Only count money when you’re away from the public or employees. If
you store your cash in a safe, change the combination regularly.
• Keep Duties Separate
– Checks and balances are important when your small business is handling lots of
cash. The people who handle the money should be different than those
responsible for book keeping.
• Don’t Round Numbers Off
– It’s called dollars and cents for a reason. Rounding off the nightly deposit by
leaving coins out can only lead to accounting headaches and imbalances in
accounts down the road. Don’t try and save time by avoiding loose change.
Conclusion
• Standards and Legislation strongly shape the way financial

institutions opperate around the world.
• Improves the quality of services offered by financial institutions
• Helps to guide and improve the performance of financial
institutions
• Promotes transparency and accountability
THE END
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Legislation, Standards & the

Finance Services Industry

The impact of legislation and Standards on the

• Local Legislation Impacting the Financial Service

• Legislation is law which has been publicised by a

• Agent Banking Regulations

• Public Sector Governance

• Credit Bureau Act

• In accordance with Bank of Jamaica Act (1960), the

• The Casino Gaming commission of Jamaica was

• The purpose of this act is to maintain a strong

• On October 13, 2011 The government of Jamaica

• Good governance in the public sector is the cornerstone for

• Tax Administration Jamaica (TAJ) administers the

• An Act to provide for the regulation of certain credit bureaus, the

• Is a repeatable, harmonized, agreed and

• They help with improving consistency & performance.

• Facilitates business interaction.

• Enables companies to comply with relevant laws and

• There are many standards that are established in the

• They are guidelines used for accounting

• Help to keep accounting practices consistent and

• Accounting standards tend to be based on Geography.

• Financial institutions in the USA follow standards that

- More countries are adoprting IFRS or

- LIFO Forbidden under IFRS in Favour of

• I.A.S. - International Accounting Standards:

• A principal-agent relationship is formed when one person

• The law of agency is an area of commercial law that deals with

• They provide strategic advice across a variety of financial products and

• Cultivate client base and build good business relationships

• Keep abreast of new industry’s trends and research market to

• Cash is money in the form of coins or notes

• This is distinct from cheques, money orders or credit.

• Even though many business are switching from the use of

• Standards and Legislation strongly shape the way financial

Thanks for Watching

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