The Securities and Exchange Commission (SEC), has revealed that it will soon tighten regulations on Fund Management in the country to cover the rapid expansion in the sector as a result of increase in market operators over the years.
Speaking at the 25th anniversary launch of Gold Coast in Accra, Deputy-Director General at the commission, Paul Ababio, said, there was the need for diversification, prudence and good corporate governance to commensurate the growth in the sector.
He revealed that the commission had outlined certain measures, bordering on issues of fixed deposits, prudential returns and compliance, and disclosure to investors, which it will soon communicate to fund managers for implementation.
One of the reforms they seek 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 activities,” he warned.
On the issue of prudential returns and compliance, Paul 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. In this way, investors will fully comprehend market dynamics and know how their investments are performing to help them make informed decisions.
“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,” he said.
“These are good practices that we will be enforcing. We also encourage market operators to differentiate themselves by the quality of information and advise they give to investors,” he concluded.
According to the Deputy Director General, fund management in Ghana has seen enormous growth over the years from under GHS 1 billion in 2010 to approximately GHS 34 billion as at March 2018. Also, the total number of fund managers last recorded, stood at 148, with new entrants seeking licenses to operate in the sector.
To this end, Paul 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.