SEC to roll out Investor Protection Fund

SEC assures of renewed confidence in markets
Paul Ababio

… forms part of measures to boost investor confidence post sector clean-up     

Regulator for fund management firms in the country, the Securities and Exchange Commission (SEC), has said that as part of mandate to regulate and develop capital market operations as well as ensure the protection of investors, it will be introducing an Investor Protection Fund (IFP).

This was disclosed by the Deputy Director General at the Commission, Paul Ababio, who stated that it formed part of a wide array of measures aimed at safeguarding investors and boosting their confidence in the industry. An IPF is a mechanism set up to compensate investors with genuine claims in the event of financial loss. Its mandate typically extends to the promotion of investor education through research-backed sensitization campaigns.

Speaking on the sidelines of the maiden edition of the Tesah Capital Investment Dialogue, he said the move is of particular importance following residual anxiety on the part of some investors, occasioned by recent reforms in the financial service sector.

“We are working on an Investor Protection Fund and one of the components of the Fund is an educational investment programme. We will expend resources which we will invest in communicating in different languages as we will have to disseminate financial literacy information and disseminate it widely as well,” he explained.

He stated that the initiative forms part of the key priorities of the soon to be introduced Capital Market Master Plan. The Deputy Director General indicated that sustained education of the investing public, market operators and their employees, as well as market development and enforcement of regulation will color the actions his outfit takes in the short to medium term.

Touching on enforcement of regulation and its role in maintaining investor confidence, he said, “If you have rules and you don’t enforce them, it can lead to a loss of confidence in the market. Some of the actions we have taken recently are to show that as the regulator, we will enforce the laws, we will work with other law enforcement agencies to drive through the requirements that are embedded in the law and our guideline.”

He further hinted at the introduction of a raft of guidelines including clearly defined client segmentation. This, he noted, will ensure that protection schemes we tailored to the needs of the investors – retail or institutional.

The inaugural edition of the Tesah Capital Investment Dialogue was on the theme, ‘Investing after the Financial Sector Clean-Up’. The virtual event had a cross-section of speakers including Senior Lecturer at the University of Ghana Business School (UGBS) and Head of the Research Committee at Tesah Capital, Dr. Elikplimi Agbloyor and renowned economist Kwame Pianim.

Others were Associate Professor in Development and Insurance Finance at the Development Finance Centre (DEFIC), Prof. Abdul Latif Alhassan and Senior Lecturer in Property Studies in the Department of Construction Economics and Management, Dr. Frank Kwakutse Ametefe, both from the University of Cape Town School of Business.

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