The government of St. Vincent and the Grenadines has updated the 178-year-old law that governs funeral cooperatives in St. Vincent and the Grenadines.
The new St Vincent and the Grenadines Friendly Societies Bill, 2021 replaces the Friendly Societies Act, 1843
“By definition, an 1843 act is likely to be archaic and does not adequately aid in the supervision of these entities in view of the absence of substantive provisions, detailed regulatory requirements or any form of sanction or penalty,” Minister of Finance Camillo Gonsalves said, on Thursday, in presenting the bill to Parliament.
The law received opposition support, with Member of Parliament for East Kingstown, D. Fitzgerald Bramble saying he was happy that it addresses the history of exploitation of friendly societies.
Bramble, however, said he would hope that there is some balance between regulating and over-regulating to the point that smaller societies are regulated out of the sector or that new ones are discouraged from starting up.
“But I agree that in these modern times that we need to make sure that our friendly societies, indeed, our financial sector, comes up to par,” the opposition lawmakers said.
Meanwhile, the finance minister told Parliament that as local, regional and international entities watch money ever more closely, the large deposits held by some friendly societies increasingly became a target of query by other financial institutions and regulators.
Gonsalves said that in 2016, the Financial Services Authority commenced a comprehensive assessment of the various business models used by friendly societies in conjunction with the provision of the guidelines and the overall long-term viability of the sector.
Before then, the FSA had sought to identify the friendly societies operating in SVG, have them registered and conducted various familiarization visits to apprise them of the work of the FSA and to obtain information about their operations.
To date, there are 18 friendly societies operating across the country.
The minister said that the new legislation introduces or ensures that the opportunities for exploitation of friendly societies and of contributors to friendly societies are minimised and appropriate sanctions exist whenever breaches of the law may occur.
The new law makes significant changes to the 1843 legislation and outlines requirements for registration, reporting requirements of friendly societies and enforcement of the investigative powers of the FSA.
“Friendly societies will be obligated to maintain appropriate records, and make those same records available for inspection by the FSA,” Gonsalves said.
“There will also be new mandatory requirements for the preparation and filing of financial statements and audit reports,’ he said, adding that while some friendly societies have been doing this, some of the smaller ones were managing their affairs in a much less structured manner.
The new law contains rules regarding the investment of funds and the holding of real estate by friendly societies.
There is now the need for friendly societies to establish or set aside a reserve fund as required by all the other financial institutions that operate in St. Vincent and the Grenadines.
There is an obligation on officials employed by societies to account for the funds of the society, which includes the singing of a bond.
“Those of us who have heard enough stories from our constituents may all have a story about so and so who faithfully took their book to a friendly society only to hear that somebody absconded with the money or that the money wasn’t there for them at the end of the process. Again, casting no aspersions on the larger and more successful and more established societies that I mentioned as registered societies,” the finance minister said.
The bill deals with the question of to whom to disburse the death benefit.
The 2021 law addresses the election of directors, the fit and proper criteria for directors, the tenure for directors, and the duty of care to be exercised by directors.
“None of that forms part of the 1843 act, but, now, that is standard practice in any institution that holds your money in trust.”
The new law empowers the registrar to suspend, cancel, or liquidate friendly societies, remove officers, conduct onsite examinations and the issue of dissolving friendly society also was not dealt with in the 1843 act but has specifically been addressed in this particular piece of legislation.”
“… we want to make sure that those societies still remain a critical component of the Vincentian financial sector. And some of them holding very, very large deposits of money are properly regulated and managed in a manner that benefits the members of the society who faithfully make their deposits at the societies and call upon them at a time when it is most needed in their lives.”