By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Central Bank yesterday warned that Bahamian banks and trust companies will still be held liable for all “acts and omissions” by agents they appoint to act as payment agents on their behalf.

Narissa Knowles, the regulator’s legal counsel, told a seminar on the Central Bank’s proposed financial services legislative reform package that the amendments to the Banks and Trust Companies Regulation Act that will permit agency banking by law are designed to keep accountability with the parent institution.

Acknowledging that agency banking is designed to boost financial inclusion and consumer access to financial services, especially in the Family Islands, by allowing commercial banks to appoint agents to act for them and provide payment services, she said: “The key objective here is to introduce and modernize agency banking, [and] also allow for banks and trust companies to appoint agents to provide payment services. “This ensures Central Bank oversight as well as accountability from financial institutions. Clause six of the draft Bill deals with the appointment of agents. What clause six does is it repeals and replaces section 11 of the principal Act to allow for banks and trust companies to offer payment services via an agent.

“If a financial institution wishes to offer payment services via an agent, they have to do so first with written approval by the Central Bank.” Certain references and information will have to be provided to the regulator, which will then assess whether to approve an agent based on compliance with supervisory standards.

As for where responsibility for any regulatory failings will lie, Ms Knowles said the Banks and Trust Companies Regulation Act will be amended “to make it explicitly clear banks, and banks and trust companies, are to remain responsible for the acts and omissions of their agents.

“As long as agents deal with the business of banks, or bank and trust companies, even though you allow payment services to be utilized through an agent, you remain liable and responsible for that agent,” she added.

“What this does, it reinforces that delegation does not reduce accountability. Accountability will remain with the bank and bank and trust company. What we are attempting to do is as service in this space expands, accountability and consumer protection remains.

“It introduces the framework for agency banking, it expands financial inclusion by expanding customer access, and all of which clearly keeps the liability with banks and trust companies to protect consumers.”