Members’ funds may be at risk in Friendly Societies in SVG – FSA
Friendly Societies in St Vincent and the Grenadines (SVG) operate with outdated systems, which may put their membersâ funds at risk.
The Financial Services Authority (FSA) is therefore urging all Friendly Societies to abide fully with the provisions of the Friendly Societies Guidelines issued by the FSA.
This advice comes hours after Morris Prescott, president of the Buccament Wise and Prudent Friendly Society was jailed for 12 months for misappropriating EC$85,000 of that financial institutionâs money.
The note of caution from the FSA also comes on the heels of complaints by at least one resident of Troumaca who is alleging that the Troumaca, Temperance Friendly Society is experiencing financial difficulties and several persons have been unable to access money that was entrusted to this entity.
On Thursday, executive director (ED) of the FSA Sharda Bollers confirmed that the FSA has been reviewing the financial condition and operating practices of the Troumaca Temperance Friendly Society.
She said that the FSA has been working with the society to assess the financial condition, management and governance structure and consequently, its viability.
âTo date, the findings of the FSA have revealed certain inconsistencies, as a result of which the FSA is providing support to the society in achieving the most appropriate and best resolution for members of the society in the present circumstances,â said Bollers.
But the executive director noted that the FSA is also reviewing the operations of all Friendly Societies, to assess whether they are capable of continuing their operations and this has revealed a number of issues.
Last February, the FSA held a workshop to emphasize the importance of following the Friendly Societies Guidelines. While in the exercise of its mandate, the FSA also embarked upon an effectiveness and sustainability assessment to verify that the sector was utilizing the provisions of the Friendly Societies Guidelines and could remain sustainable.
âDuring this assessment period, a number of inconsistencies were noted at certain Friendly Societies, which the FSA has been assiduously working with the individual Friendly Societies to have addressed,â stated Bollers.
âThe FSA is concerned that Friendly Societies operate with outdated systems and so may be putting their membersâ funds at risk; therefore, the FSA continues to work with individual societies to rectify deficiencies and ensure corrective measures are implemented,â said Bollers.
She noted that in doing so, the FSA is obliged to ensure that anomalies amounting to criminal offences are brought to light and appropriately addressed and that the FSAâs priority in addressing such matters remains the minimizing of loss to members.
However, Bollers said that at times, such loss may be unavoidable, depending on the specific matters being addressed by the FSA.
âThe FSA fully recognizes the significant and meaningful role which Friendly Societies play to certain sectors of Vincentian society, in providing the means of burial for loved ones and encouraging thrift. While the FSA is committed to working towards preserving the sector, at the same time, its objective is in ultimately ensuring a safe and stable sector and financial system,â Bollers pointed out.
The FSA head said that she is urging all Friendly Societies to ensure that their membersâ funds are protected and that they have sound, transparent and accountable management systems and internal controls in place. She is also encouraging members of these institutions to seek accountability on the part of persons holding positions of responsibility.
In relation to the Buccament Wise and Prudent Friendly Society, Bollers said that they were very much aware of all the developments relating to that society in 2016, including the actions of the former president, who is now in prison.
âThe FSA was instrumental in having the issue of misappropriation of membersâ funds at this Friendly Society by the stated former president properly investigated and has provided full cooperation to the relevant authorities in the proceedings against the stated individual. The FSA would have also provided full support to this Friendly Society in re-establishing the appropriate structure for continuance as a society, and continues to closely monitor the work of the new board,â stated Bollers.
It was also noted that the FSA is involved in outreach to all Friendly Societies operating here, firstly, to have them all identified and registered and secondly, to obtain necessary data about their operations.
âTo date, 16 Friendly Societies are registered with the FSA, 10 in mainland St Vincent and six in the Grenadines. The FSA is currently working with four other entities to get them registered,â stated Bollers.
The ED said that in recognition of the need to modernize the legislative framework governing Friendly Societies, the FSA is working towards developing a more modernized regulatory framework for them, which could be immediately effected, while the old law is being revised.
âThe FSA formally issued Friendly Societies Guidelines to the sector in 2015, to govern the operations and business practices of the Friendly Societies in St Vincent and the Grenadines. The main objective of these Guidelines is to promote up to date operational best practices by Friendly Societies and to ensure that they remain financially sound,âshe explained.
The FSA was established in November 2012 and is the present regulator of Friendly and Benevolent Societies in St Vincent and the Grenadines.