Government unveils major reforms of financial services regulatory bodies

- Thursday, April 7, 2011

Government unveils major reforms of financial services regulatory bodies

The Chilean government has announced major reforms to the country's financial services regulatory bodies, following recommendations by a commission it appointed as part of a capital markets reform agenda, known as MKB, a press release reads.

The seven-member financial supervision commission - presided over by former central bank BCCH VP Jorge Desormeaux - was formed in August last year as part of the institutional pillar of MKB's seven-pillar model, announced in early May 2010.

The first structural reform will be the creation of a Financial Stability Commission (CEF), which will have as members the finance minister, the BCCH president and the heads of the banking regulator SBIF, now to be called Comisión de Bancos e Instituciones Financieras (CBIF); securities and insurance regulator SVS, now Comisión de Valores y Seguros (CVS); and pensions regulator SP.

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CEF's role will be to act as chief coordinator, "destined to safeguard the integrity and solidity of the financial system, to preserve macroeconomic stability and to replace the current functions of the superintendents committee and the capital markets committee," the statement reads.

SECOND STRUCTURAL REFORM

The second reform announced by finance minister Felipe Larraín is the strengthening of the banking regulator and the securities and insurance regulator. The pension regulator, however, will remain unchanged.

Both CBIF and CVS will see changes in their internal structures, as they will now have a five-member committee, replacing the current model of a single person heading the institution. The new structure will "substantially improve their corporate governance," Larraín said.

Larraín added that the changes being introduced are not in response to a crisis, but rather made with "an interest in improving things and trying to achieve better global [regulatory] standards."

To read the full financial supervision commission report in Spanish, go to this link

To read the full press release from the ministry in Spanish, go to this link