The Ghana Securities Industry Association, the umbrella body of organisations licensed by the Securities and Exchange Commission, is urging government to consider increasing the payouts to collapsed fund management companies whose funds are with the receiver.
A Governing Council Member of the Association, Kisseih Antonio, in an interview with Citi Business News said while the receivership process has been encouraging so far, the cap on cash payouts to fund managers makes it difficult for them to sort out their distressed customers.
With government’s intent of ensuring all depositors of collapsed savings and loans companies, finance houses and MFIs are fully paid their deposits, Kisseih Antonio argues that increasing the cash component to fund managers would do the industry a lot of good, adding that there has to be increased financial literacy for the public.
The Securities and Exchange Commission (SEC) last year revoked the licenses of 53 fund management companies for several regulatory breaches.
The companies were said to have more than eight billion cedis in assets under management. The collapse of the companies came at a time a number of the firms were unable to meet investors’ demands for the funds.
An analysis of the country’s financial sector showed that some of the collapsed fund management companies had their funds locked up in savings and loans companies and other financial institutions that were shut down by the central bank.
But Mr. Antonio told Citi Business News that restoring full confidence in the financial sector requires that investors in the fund management space are also allowed to have access to their funds in cash rather than in bond payments as has been planned by the receiver.
“We want to plead with the government to treat SEC-regulated institutions like the banks. We see that with the banks, we had depositors being paid in full, but with fund managers, we see that there is a cap, and investors are being paid with paper in any amount in excess of GHS170,000. If the government is to treat us like the banks that will go a long way in restoring confidence in the financial sector,” he stated,
Mr. Antonio called on fund management companies that have received some form of payments from the receiver to take steps to payout investors’ locked up funds.