The Securities and Exchange Commission (SEC) is to tighten regulations on Fund Management in the country in keeping up with the growth of the sector and increase in market operators over the last seven years.
The new guidelines, expected in the coming months, borders on issues of fixed deposits, prudential returns and compliance, and full disclosure to investors.
One of the reforms the SEC seeks to introduce in the sector is the scrutinisation of fixed deposits. The Commission is of the view that, by offering fixed returns to investors, fund managers engage in the business of banking which causes regulatory problems.
“Going forward, we will not look kindly on such [fixed returns] activities,” Deputy-Director General of the Commission, Paul Ababio said at the 25th anniversary of Gold Coast in Accra.
Fund management in Ghana has seen enormous growth over the years, from under GHȼ 1 billion in 2010 to approximately GHȼ 34 billion as at March, 2018.
The total number of fund managers last recorded, stood at 148, with new entrants seeking licenses to operate in the sector.
On the issue of prudent returns and compliance, Mr. Ababio called for timely and accurate information from market operators, which he identified as vital for effective regulation of the sector.
Similarly, the commission believes investors rely heavily on timely and accurate information and therefore urged fund managers to adopt a policy of proper disclosure of information to investors.
“Investors also rely on timely and accurate information to make decisions. They need to understand your products better, and as a regulator, we expect you to make adequate disclosures on your investment strategy, portfolio composition, and any risks inherent with investing.
These are good practices that we will be enforcing. We also encourage market operators to differentiate themselves by the quality of information and advice they give to investors,” he said.
Mr. Ababio believes the rapid change in the sector calls for more stringent measures to regulate and ensure that investors are well protected.
“Change is difficult, but in order to grow and survive, we need to change how we do things. The world we live in has changed significantly and keeps changing. How we regulate financial markets has also evolved, and in Ghana, we cannot afford to ignore the trends happening in our own markets,” he said.
Kennedy Aryeetey Tetteh | thebftonline.com | Ghana