The Diagnosis Behind the Reform: Why Jamaica Chose Twin Peaks, and What It Must Now Deliver

What actually happened at SSL

On 17 January 2023, a Jamaican investor went public with allegations that her investment account at Stocks and Securities Limited — a securities dealer regulated by the Financial Services Commission for over four decades — had been systematically drained over a period of years. Within days, what began as one client’s complaint had become the largest publicly known investment fraud in Jamaican history. The Financial Services Commission moved to take temporary management of SSL. The Financial Investigations Division and the Major Organised Crime and Anti-Corruption Agency commenced investigations. The international forensic investigations firm KROLL Associates UK Limited was engaged by the Government to conduct an independent forensic audit, which it delivered in November 2023.

The KROLL report confirmed that the suspected fraudulent activity and mismanagement at SSL and its related parties was much broader than initially understood. Client securities had been moved off-balance-sheet without authorisation. Statements sent to clients reflected holdings that no longer existed in the form described. Cash balances had been redirected. The fraud spanned more than a decade, multiple employees, and a complex network of related-party companies and bank accounts. As of the most recent updates from the Ministry of Finance, the Temporary Manager has continued the work of returning Jamaican-dollar securities and cash balances to clients, with approximately 70 per cent of Jamaican-dollar denominated assets in SSL’s off-balance-sheet portfolio transferred or pending transfer through trust arrangements.

The criminal proceedings continue. Asset recovery under the Proceeds of Crime Act will require completed criminal convictions before benefit investigations can begin in earnest. For the affected clients, the case is far from closed. For the Jamaican financial sector, the consequences arrived within weeks. Public confidence in non-bank financial supervision was visibly damaged. International correspondent banking relationships came under renewed scrutiny. Two weeks after the SSL allegations broke, the then Minister of Finance Dr. Nigel Clarke announced that Jamaica would adopt the Twin Peaks model of financial sector regulation.

That announcement was not coincidental. The Twin Peaks decision was the most significant institutional response to a financial scandal in Jamaican post-independence history. It signalled that the Government’s diagnosis was not that SSL was a single rogue institution but that the architecture which permitted SSL — that allowed a regulated firm to move client securities off-balance-sheet for over a decade without detection — was no longer fit for purpose.

The diagnosis behind the cure

Twin Peaks is sometimes presented as a generic best-practice reform — a model worth adopting because Australia and the United Kingdom have it. The deeper truth is that the Jamaican Twin Peaks decision is a specific response to a specific diagnosis of what went wrong with SSL and what could go wrong elsewhere if the architecture remained unchanged. Six features of the existing arrangement are particularly relevant.

The first is that the Financial Services Commission, in its current form, was responsible for both prudential and conduct supervision of SSL. The same supervisory team examined SSL’s capital adequacy, its solvency margins, and its compliance with prudential regulations — and was also responsible for examining its market conduct, its treatment of clients, the suitability of its sales practices, and the accuracy of its statements to clients. In an environment of constrained supervisory resources, prudential matters tend to absorb the available attention because they are quantifiable, periodic and benchmarked against international standards. Conduct matters tend to receive what is left over.

The second is that the FSC’s enforcement toolkit, particularly for conduct breaches, was and remains incommensurate with the scale of harm such breaches can cause. Civil penalty powers for serious conduct violations are narrow. Statutory consumer redress mechanisms — the means by which a defrauded client can obtain compensation directly from the regulator’s intervention without years of civil litigation — do not exist in the form that mature jurisdictions have established. The remedy for an SSL-affected client today is essentially the same remedy that was available in the 1990s: criminal prosecution of perpetrators, where evidence permits, and civil recovery from whatever assets remain.

The third is that the regulatory perimeter for client asset segregation, custody and reconciliation has not kept pace with international standards. Securities dealers in Jamaica are required by regulation to segregate client assets from their own. They are required to maintain records. But the statutory architecture for independent custody, mandatory daily or weekly reconciliation by an independent party, public reporting of client asset balances, and direct rights of action for clients in the event of insolvency is significantly weaker than in the comparable Twin Peaks jurisdictions. SSL’s ability to move client securities off-balance-sheet over an extended period was, at root, a function of weaknesses in the custody and reconciliation regime — not weaknesses in the fraud-detection capabilities of any individual examination.

The fourth is that the supervisory information available to the FSC was, and remains, less granular than the information typical regulators in mature jurisdictions hold. There is no requirement, for example, for all securities dealers to publish their capital adequacy ratios — leaving the investing public unable to compare the financial strength of one dealer against another at the level of detail expected by international standards. Client asset reporting at frequencies and granularities suited to early detection of off-balance-sheet activity is also limited.

The fifth is that the cooperation architecture between the FSC and other agencies — the Bank of Jamaica, the FID, the Office of the Director of Public Prosecutions, the Major Organised Crime and Anti-Corruption Agency, and overseas regulators — has historically been operational rather than statutory. Information-sharing has happened, but on the basis of memoranda of understanding and goodwill rather than statutory gateways with prescribed obligations. The 2002 IOSCO Multilateral Memorandum of Understanding provides for cross-border cooperation, but its operational cadence in the Jamaican context has been below the levels typical of larger jurisdictions.

The sixth is the question of fit-and-proper testing for senior managers and beneficial owners of regulated firms. Existing requirements under the Securities Act and the Securities (Licensing and Registration) Regulations are real but do not match the scope of the international trend toward individual accountability regimes — the Senior Managers and Certification Regime in the United Kingdom, the Banking Executive Accountability Regime in Australia, and the Conduct of Financial Institutions provisions in South Africa — under which named senior executives carry personal regulatory responsibility for specific business outcomes.

The deeper question is not whether the Twin Peaks legislation will be enacted. It is whether the legislation as enacted will close the specific gaps that SSL exposed.

How Twin Peaks responds — and where the response stops short

On the first diagnosis — the conflicting prudential and conduct mandates inside one regulator — Twin Peaks is a direct and complete response. The prudential function moves to the Bank of Jamaica. The conduct function remains with a redesigned FSC whose statutory purpose is the protection of customers and the integrity of market conduct. Each peak has a single, focused mandate. The institutional incentive to subordinate conduct concerns to prudential concerns is structurally removed. This is the architecture’s most consequential change and the one for which Australia, the United Kingdom, the Netherlands, New Zealand and South Africa adopted the model.

On the second — the inadequate enforcement toolkit — the Twin Peaks legislation that the BOJ has confirmed is approximately 95 per cent ready for submission to the Ministry of Finance is expected to provide statutory civil penalty powers calibrated to international benchmarks, expanded investigative powers, and a comprehensive enforcement regime. The Minister of Finance has explicitly noted that current laws do not provide BOJ or FSC with legal authority to enforce consumer-protection service-level standards through fines, and that this gap will be addressed in the future legislation. The direction of travel is clear. The unanswered question is whether the calibration of penalties — the actual maximum amounts, the multipliers for repeat offences, the corporate-versus-individual structure — will reach international benchmarks or settle below them. International experience is consistent: under-calibrated penalties produce under-deterred behaviour.

On the third — client asset segregation, custody and reconciliation — the response is currently incomplete. The Twin Peaks legislation as drafted is principally about institutional architecture: who supervises whom, on what basis, with what powers. The substantive client asset rules sit in the Securities Act, the Securities (Prudential) Regulations and FSC guidelines. These can be modernised in parallel, but they require their own legislative and regulatory work. The FSC’s October 2024 announcement of a comprehensive review of the regulatory arrangement of the stock market is the appropriate vehicle for this work, but the timetable is independent of the Twin Peaks cutover and the substantive content has not yet been published.

On the fourth — supervisory information — the response will depend on regulatory choices made under both new mandates. The new prudential FSC at the BOJ will inherit and likely strengthen capital adequacy reporting for securities dealers. The new conduct FSC will need to introduce client asset reporting, complaint volume and theme reporting, and outcomes-based supervisory data of the type that the Financial Conduct Authority and the Australian Securities and Investments Commission have developed over the past decade. None of this is in the Twin Peaks legislation itself. All of it is the operational work that the new regulators must take up after the cutover.

On the fifth — statutory cooperation architecture — the Twin Peaks legislation is expected to establish a statutory Council of Financial Regulators or equivalent coordination mechanism, with prescribed membership, meeting frequency and reporting obligations. This is a meaningful upgrade from the current operational arrangements and aligns Jamaica with the architecture used in Australia, South Africa and the United Kingdom. The cross-border dimension — operational cadence of MMoU cooperation requests, information-sharing gateways with overseas regulators, and the international cooperation team within the FSC — is an operational matter that will follow.

On the sixth — individual accountability — the Twin Peaks legislation as currently understood does not include a Jamaican analogue of the Senior Managers and Certification Regime. Whether one is added at the legislative stage, or follows in subsequent regulation, is one of the most consequential design questions still open. The international evidence is strong that individual accountability regimes change senior management behaviour in ways that institutional rules alone do not, because the personal consequences of regulatory failure become specific, named and traceable. The SSL case is, on the available facts, a case in which the absence of such a regime mattered.

Three further conditions for actual prevention

Twin Peaks is necessary but not sufficient. Three further conditions need to be in place if the architecture is to deliver the prevention it promises.

Resourcing of the new regulators must match the scope of the new mandates. The conduct supervision of an entire financial sector — banks, securities dealers, insurers, pension funds, investment advisers — is a much larger task than the conduct supervision of non-bank financial institutions alone. The new FSC will need significantly expanded specialist headcount in market supervision, data analytics, complaints handling, conduct examinations, enforcement, and cross-border cooperation. The Australian Royal Commission into Misconduct identified under-resourcing as a contributing factor to that country’s conduct failures despite a Twin Peaks architecture that had been in place for two decades. The lesson is direct.

Enforcement track record must be built deliberately. The credibility of a conduct regulator is established through its first major cases, not its founding statute. The early enforcement record of the new FSC will set expectations across the regulated industry for years. Cases must be selected for both their conduct gravity and their educational value to the industry. Penalties must be calibrated to deter repetition. Public communications around enforcement decisions must be clear, principled and consistent. The Financial Conduct Authority in the United Kingdom built its post-2013 credibility through a sustained programme of enforcement action across LIBOR manipulation, foreign exchange rigging, mis-sold payment protection insurance, and IT migration failures. The Jamaican equivalent will need its own, locally resonant equivalent.

Industry culture must shift in advance of enforcement, not in response to it. The institutions that read Twin Peaks as a compliance burden to be navigated will continue to produce conduct failures of the type that Twin Peaks is designed to address. The institutions that read it as a governance imperative — that strengthen their own client asset arrangements, conduct risk frameworks, complaints handling and senior management accountability ahead of statutory requirement — will not only avoid enforcement but will compete more effectively for institutional capital, retail trust and regulatory goodwill. The strategic prize for early adopters is real.

The early enforcement record of the new FSC will set expectations across the regulated industry for years. Credibility is established through cases, not statutes.

What boards should examine now

Three years after SSL, the question for boards is no longer whether the regulatory architecture will change. It is what to do with the time that remains before it does. Five examinations should sit on every board’s agenda this year.

The first is an honest internal assessment of client asset segregation, custody and reconciliation. Not the certificate that compliance produces. An independent, externally-led assessment of how client assets are actually held, who reconciles them, how often, with what records, and what would happen in an insolvency scenario. The institutions that find weaknesses in this exercise will find them now, when they can be fixed quietly. The institutions that wait will find them when a future regulator finds them, in circumstances that are not quiet.

The second is a review of senior management accountability. Whether the Twin Peaks legislation introduces a formal Senior Managers and Certification Regime or not, the direction of regulatory travel internationally is unambiguous. Boards should pre-emptively document, for each business line and control function, which senior executive is personally accountable for specific outcomes, how that accountability is evidenced, and how it would be tested in a regulatory examination. Where the documentation is unclear, the accountability is unclear, and that is the risk.

The third is a conduct risk framework stress test. Take the leading-edge international standard — the Financial Conduct Authority’s Consumer Duty — and ask: would our current sales practices, suitability frameworks, fair value assessments, vulnerable customer policies, and complaints handling pass that standard? If the honest answer is no, the remediation work is the work of 2026. The new FSC will not adopt the Consumer Duty verbatim, but the regulatory direction toward outcomes-based conduct supervision is strongly evidenced across every Twin Peaks adopter.

The fourth is a review of fit-and-proper documentation for all senior managers, directors and beneficial owners. The Twin Peaks legislation is likely to expand the scope of fit-and-proper testing and, more consequentially, to require fit-and-proper status to be maintained on a continuing basis rather than at the point of initial appointment. Institutions whose fit-and-proper records are out of date or incomplete will find this transition uncomfortable. Institutions that update their records this year will not.

The fifth is a complaints handling audit. Under the new regime, complaint volumes, complaint themes, complaint resolution times, and complaint outcomes will become supervisory data. The new FSC will receive periodic returns on these metrics. Patterns will be noticed. Outliers will be examined. Boards that cannot today produce a clean, accurate, timely report on their complaint experience will find themselves at the back of the line for supervisory goodwill.

The Caribbean lesson

The SSL case is a Jamaican case but its lessons are Caribbean. Every jurisdiction in the region operates a financial sector that depends on the credibility of its supervisory architecture for its access to international capital, its correspondent banking relationships, its sovereign credit and the confidence of its own citizens. The supervisory weaknesses that allowed SSL are not unique to Jamaica. Some are, in fact, more pronounced in smaller jurisdictions where regulatory capacity is more constrained.

Jamaica’s Twin Peaks transition is therefore being watched across the Caribbean — in Trinidad and Tobago, in Barbados, in the Bahamas, in the Eastern Caribbean Currency Union — as a prototype. If the Jamaican model delivers, regional adoption is plausible within a decade. If it stumbles, the region will find another way. The institutional choices being made in Kingston in 2026 carry weight far beyond Jamaica’s own borders.

That is the framing every Caribbean board should bring to this moment. Not the parochial framing of compliance with a Jamaican legislative change. The strategic framing of a regulatory architecture that, if implemented credibly, will reset the conversation about the Caribbean financial sector for the next generation. The institutions that prepare for the rigour will benefit from the credibility. That is the SSL lesson, three years on.

 

PARTNER WITH DAWGEN GLOBAL Building the Institution That SSL Was Not The institutions that read SSL as a Jamaican incident missed the lesson. The institutions that read it as a diagnosis of regulatory and operational architecture across the Caribbean financial sector are already the institutions best positioned for the post-Twin Peaks era. Dawgen Global brings audit and assurance heritage with deep regulatory advisory experience to help boards, senior management and control functions build the institutional standards that the new regime will require — Big Firm capabilities, with Caribbean understanding. Six advisory engagements designed for this moment: ▸  Client Asset & Custody Assurance — independent review of client money, securities custody, segregation arrangements, reconciliation processes and insolvency-scenario rights of action for securities dealers and investment managers. ▸  Senior Manager Accountability Mapping — preparing for the introduction of individual accountability regimes by documenting senior management responsibility allocations, evidence of oversight, and accountability frameworks aligned to international benchmarks. ▸  Conduct Risk Framework Stress Test — benchmarking sales practices, suitability frameworks, fair value assessments, vulnerable customer policies and complaints handling against the FCA Consumer Duty and emerging Caribbean standards. ▸  Fit-and-Proper Programme Review — reviewing and refreshing fit-and-proper documentation for senior managers, directors and beneficial owners under continuing-status requirements. ▸  Complaints Handling and Outcomes Audit — independent assessment of complaints capture, themes, resolution and outcomes data ahead of supervisory reporting requirements. ▸  Forensic Readiness and Internal Controls Review — strengthening internal controls, separation of duties, reconciliations, internal audit and external audit interfaces against post-SSL benchmarks. Begin the conversation today. Email: [email protected]

COMING NEXT IN THIS SERIES

Article 3  —  The Practice Period: A Distinctive Caribbean Approach to Regulatory Transition

Publishing Thursday 11 June 2026

Jamaica is doing something unusual in the Twin Peaks family. Rather than wait for legislation, the BOJ and FSC are operating a structured Practice Period — joint examinations, service-level standards, capacity-building exercises — that builds the new regime in operational terms before the statute arrives. The next article examines what the Practice Period is, what it has achieved, and what other Caribbean jurisdictions can learn from it.

ABOUT THE AUTHOR

Dr. Dawkins Brown is the Executive Chairman and Founder of Dawgen Global, an independent, integrated multidisciplinary professional services firm headquartered in New Kingston, Jamaica, operating across more than fifteen Caribbean territories. With Big Four heritage and over twenty-three years of professional experience, Dr. Brown writes regularly on Caribbean financial regulation, capital markets, governance and strategy through the LinkedIn newsletter Caribbean Boardroom Perspectives.

About Dawgen Global