They didn't learn - Jamaicans still investing in unregulated financial schemes

Christopher Serju, Gleaner Writer

Many Jamaicans, it seems, are unphased by the collapse of alternative investment schemes three years ago and the fact that they took billions of investors' dollars down with them.

The 64 unregulated schemes on the Financial Services Commission (FSC) books speak to investors' continued interest in these schemes and an obvious disregard for warnings by the regulator.

However, both the police and the FSC have developed strategies to deal with them. The police will be taking the fight to them (See today's Editors' Forum magazine) and the FSC will be undertaking a national campaign to educate the public and make them less vulnerable to people who would use illegal financial schemes to swindle them out of their money.

It is proposed that the programme to provide easily accessible information to the investing public to allow them to make informed decisions will cost $50 million over two to three years. The FSC is trying to bring stakeholders on board for this.

The FSC's communications manager, Nadene Newsome, recently told a Gleaner Editors' Forum that the proposed comprehensive programme of public education was deemed necessary to protect the uninformed and gullible public in light of the collapse of alternative investment schemes such as Cash Plus, World Wise and Olint.

Supporting her, Rohan Barnett, executive director of the FSC, told the forum: "There is certain information that every prudent investor will have to see in order to justify the decision as to whether or not to make a certain investment. That includes balance sheets, financial data about the company, your regulatory status - are you registered? I think all of these things are just basic and fundamental to any investment decision out there.

"I don't agree with the suggestion that capital markets should operate in this unbridled fashion, so that anyone who decides that they have an idea can enter the market and start taking people's money without being able to provide them with the necessary information to support that."

Newsome said the education project will bring all stakeholders together under one banner with the ultimate aim of educating the public on specific financial products and financial issues so that the mistakes which were made in the past are corrected.

Explaining that the FSC is unable to fund the project alone, Newsome said it hosted a forum with potential stakeholders last August to get a buy-in for the different areas. Those potential stakeholders included the Jamaica Bankers' Association, Insurance Association of Jamaica and micro-financing institutions.

Orville Johnson, executive director of the Insurance Association of Jamaica, said, "We pledged our support and when a more comprehensive programme is worked out, we expect to hear a bit more from them at that stage and we'll be only too happy to assist."

He added: "We think that the information that is out there, if you demystify it, then you get rid of the charlatans out there."