ISLAMABAD (September 05 2007): The Securities and Exchange Commission of Pakistan has clarified that there are no plans for shifting the supervisory/regulatory control over scheduled banks from the State Bank of Pakistan to SECP. However, it is seeking power to freeze bank accounts of 'persons' under investigation for a limited period.
Reacting to a newspaper report on Monday, a spokesperson for the SECP said that the proposed Financial Services Commission of Pakistan Act, 2007 – the administered legislation specified in the first scheduled of the said Act comprises the following:
(i) Chartered Accountant Ordinance, 1961; (ii) Securities and Exchange Ordinance, 1969; (iii) Companies (Appointment of Legal Advisers) Act, 1974; (iv) Modoraba Companies and Modaraba (Floatation and Control) Ordinance, 1980; (v) Companies Ordinance 1984; (vi) Central Depositories Act, 1997; (vii) Insurance ordinance, 2000; (viii) Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance, 2002; (ix) Securities Act 2007; (x) Futures Trading Act, 2002 and all subsidiary legislation thereunder.
Further, he said, the “Financial Services Markets” in the Act means all markets in which financial services are provided. And, “financial services” mean all services provided by regulated persons under administered legislation provided in the First Schedule. Since the First Schedule does not cover either the State Bank Act or the Banking Companies Ordinance – 'scheduled banks' as such do not form part of the financial services market covered under the proposed FSC Act 2007, emphasised the SECP spokesman.
The rationale for establishment of a financial Ombudsman and Financial Tribunal, said SECP, is to reduce the workload in the courts and have a dedicated set-up for quick disposal of cases.
At present, he said, the SECP as a practice goes through the State Bank of Pakistan to obtain information and seek action against its erring regulatees, although the existing law gives it direct access to obtain it directly from banks.
However, he said, experience shows that funds are pulled out of the accounts by a regulatee under investigation before they can be seized by the SECP. Therefore, the new act seeks to empower the Corporate regulator to freeze accounts for a limited period of four weeks under a direct directive to banks for completion of the investigation for the greater good of the general investors.
Regarding the inclusion of the Finance Minister/Advisor to the Finance Minister on the Policy Board of the proposed commission, the spokesperson pointed out that the National Assembly has already approved their inclusion on the existing Policy Board of SECP in the money bill FY2008. “Now we can only express our helplessness, after all Parliament is the supreme body, he added.”