By Clint Chan Tack Friday, September 10 2010

FORMER Trinidad and Tobago Unit Trust Corporation (TTUTC) executive director Clary Benn yesterday welcomed Finance Minister Winston Dookeran’s announcement that the Unit Trust Corporation (UTC) will be placed under the regulatory oversight of the Central Bank.

Stating this move was in line with plans that were being made back in 1999 while he was still at the UTC, Benn said none of the corporation’s 500,000 unit holders should feel concerned about this decision.

When he presented the 2011 Budget in the House of Representatives on Wednesday, Dookeran said Government wanted to strengthen the regulatory framework governing the UTC’s core collective investment scheme business. According to Section 33 of the UTC Act, the Central Bank has the authority to guide the UTC’s board on monetary and financial policies involving the public interest from time to time.

Stating the current statutory arrangements governing the UTC were inconsistent with the Securities and Exchange Commission’s (SEC) guidelines for such investment schemes, Dookeran said, “Our policy will ring-fence the Trust’s assets from the assets and liabilities of TTUTC.”

Benn said when the UTC was first established in 1982 it was the dominant provider of mutual funds at that time and it enjoyed a virtual monopoly in this area up to 1993.

Observing that UTC is no longer the “only game in town” regarding mutual fund products, Benn said the corporation has grown and moved “beyond mere mutual fund management.” The corporation today has subsidiaries which provide merchant banking, asset management, trust and other financial services.

Against this background, Benn said the UTC recognised that it was “absolutely necessary” for these various functions to be separated to ensure good corporate governance . He said while these various entities have been properly incorporated, the existing UTC legislation is inadequate and needs to be amended “sooner rather than later.” Benn added that when he left the UTC in 2004, steps were already being taken in this direction and he was confident the necessary changes would be made to ensure the various operations of the UTC and its subsidaries were properly aligned.

Dookeran noted some progress had already been made with the incorporation of the UTC Trust Services Ltd in June 1999 under the Companies Act.