In the Nairobi International Financial Centre (NIFC), regulatory oversight is paramount to maintaining the integrity of the financial system. Regulation 19 of the NIFC Regulations, 2021, grants the Authority significant powers to take action when deemed necessary to uphold its objectives and safeguard the interests of clients and the financial system.
This article explores the circumstances under which the Authority may exercise its powers and the procedural requirements associated with such actions.
Authority’s Powers and Circumstances for Action
Safeguarding Certification Criteria
The Authority is empowered to take action if a certified firm is failing or is likely to fail to satisfy the applicable criteria for certification. This ensures that entities within the NIFC maintain the standards necessary for certification.
Addressing Non-Performance
In cases where a certified firm fails to carry on a qualified activity for which it has been certified for at least twelve months, the Authority may intervene to address non-performance and ensure compliance.
Protecting Interests of Clients and the Financial System
The Authority may take steps to protect the interests of clients or customers of a certified firm and the overall stability of the financial system.
Enforcing Compliance
Actions may be taken if a certified firm breaches conditions, restrictions, or requirements, or if it is otherwise in breach of the Act, regulations, rules, or guidelines. Additionally, providing false or misleading information to the Authority is grounds for intervention.
Notice and Representation Requirements
The Authority’s exercise of powers involves issuing a written notice to the certified firm, outlining conditions, restrictions, requirements, or changes to certification.
Opportunity for Representation
Before taking any action, the Authority provides the certified firm with an opportunity to make representations. The Authority considers these representations in determining the appropriate steps.
Exceptions to Representation Requirements
Exceptions to the representation requirements exist when delays may be prejudicial to the interests of clients, customers, or the financial system. In such cases, the Authority promptly considers representations post-action or when following a Tribunal decision.
Cancellation of Certification Requirements
The Authority cannot approve an application for the cancellation of certification unless the certified firm has ceased certified activities, settled outstanding fees, provided necessary reports, and discharged outstanding liabilities.
Conclusion
Regulation 19 of the NIFC Regulations, 2021, empowers the Authority to take swift and decisive action when necessary. This ensures that certified firms within the Nairobi International Financial Centre adhere to the highest standards, promoting a robust and trustworthy financial ecosystem.
The procedural requirements, including notice and representation, underscore the importance of transparency and fairness in regulatory actions.
