Press Release on the Issuance of the Royal Decree Establishing the Financial Services Authority and Its Law

31 March 2024

FSA, New Entity New Vision

 

Press Release on the Issuance of the Royal Decree Establishing the Financial Services Authority and Its Law

 

Royal Decree No. 20/2024 on the establishment of the Financial Services Authority (FSA) and  issuance of its law came to rearrange the financial services system and enhance the integrity and independence of the financial sector in the Sultanate of Oman by expanding the businesses and sectors regulated by the FSA to include one of the most important financial sectors, which is the supervision and regulation  of the accounting and auditing profession, in addition to capital market and insurance sectors.

 

In this regard, the new FSA’s law represents a general reference for all the sectors it supervises, and paves the way for the issuance of sectoral legislation, including special laws and regulations for each sector commensurate with its nature and organizational structure, all of which aim to achieve structural and operational benefits. As for the structural benefits, they are linked to integrating the financial sector into the national decision-making system and enhancing the FSA’s role in providing an appropriate investment environment to achieve economic diversification, encouraging investment, developing the private sector, work and employment initiatives, and enhancing international cooperation. As for the operational benefits, there are many, the most foremost are strengthening the regulatory and supervisory role of the FSA, and enabling building national capacities and human capital in specialized sectors that attract he youth to this promising sector.

 

In order to achieve all of this, and to facilitate the integration of the FSA into the national decision-making system and to activate the role of the financial sector as an enabling sector for economic development, it was imperative to work on facilitating the making of the higher strategic decisions related to the FSA’s functions in a stable and clear manner, which was achieved through directly reporting to the Council of Ministers. Moreover, the law allowed the FSA’s Board of Directors to form permanent or temporary advisory committees, which would contribute to activating community and sectoral participation among the FSA and other entities in a way that contributes to enabling the FSA to contribute effectively to rendering national priorities and comprehensive and sustainable development programs.

 

 

Hence, the FSA’s work system was based in its formulation on three main pillars in regulating the non-banking financial sector in the Sultanate of Oman, whereas the first of these pillars is to enhance the protection of the rights of investors and consumers dealing with the regulated and supervised sectors, enhancing confidence in the markets, encourage investment, and achieving economic inclusion. The second pillar is to enable the FSA to carry out its supervisory and regulatory roles in a manner consistent with the requirements of the Oman National Vision 2040, and the developments in international principles and standards set by international organizations such as the International Organization of Securities Commissions (IOSCO) and the International Association of Insurance Supervisors (IAIS) through a set of powers and functions. The third of the pillars is enhancing financial stability from the perspective of the sectors supervised by the FSA in a way that ensures its efficiency and ability to overcome the challenges and manage the risks and crises.

 

 

It is worth noting that the establishment of the FSA with this name came to embody the comprehensiveness and depth of the sectors it regulates and supervises under the Royal Decree. This name also allows for the addition of new activities that may appear in the future, as the concept of financial services accommodates non-banking financial sectors of various types and fields, which is appropriate with the tasks and responsibilities assigned to the FSA, referred to in Article Five, as the FSA regulates, supervises and organizes all the components of the capital markets, the insurance sector and credit rating agencies.

The FSA’s law allowed it to supervise the regulation of the commodities and energy market, which is a new step to regulate the products related to everything that can be considered within the commodities market, such as carbon, gold, agricultural products, or the energy market, such as oil, electric power and others.

 

In a ground-breaking regulatory move to develop accounting and auditing firms and upgrade their performance towards the best levels of integrity and credibility, the above-mentioned article specifies that the FSA shall be responsible for regulating the accounting and auditing profession. It can be said that focusing on strengthening the regulatory and supervisory structure of the accounting and auditing profession is an integral link to the development of the national financial sector. This would have constructive impact in addressing many of the challenges related to data integrity and accuracy of financial reports of private sector institutions, and of course confidence in the financial markets and the entities operating therein.

 

Among the operational benefits expected from the establishment of the FSA is facilitating access to information, and therefore the Decree provided for the right of access to information and documents related to the regulated entities to every stakeholder, which strengthens the right of access to information within reasonable and fair frameworks, which enhances the principles of transparency and integrity.

 

In the same context, the legislator conferred on FSA broader supervisory powers to translate regulating laws and legislation through audit and inspection processes on the regulated entities, whether offsite or onsite audit, or through electronic links and providing legal support for financial regulation and supervision technologies consistent with the government approach towards digital transformation and advanced technologies.

 

In the context of enabling the FSA to carry out its supervisory roles, the legislator granted the FSA the right to implement everything necessary to implement the law, and it was also clearly entrusted with organizing administrative investigations and the necessary summons and requesting the attendance of violators of local legislation related to its jurisdiction or on the occurrence of  violation of the provisions of counter parties’  laws  outside the Sultanate of Oman, reinforcing Its international standing, facilitating its integration with the global economies.

 

 

 

In a future outlook derived from Oman Vision 2040, the law of the FSA aims to achieve a national goal, which is to expand the efforts currently being made by the FSA to empower human capital in the regulated sectors, which is to enable national cadres to engage in areas of new specializations, which enhances the role of the private sector to accommodate national cadres in specific professions that require high technical skills and capabilities. In addition to the new specialized sectors that the FSA would supervise in terms of regulation and oversight, the law allowed the FSA to establish or contribute to the establishment of a specialized educational or professional training institution with the aim of supporting   the regulated sectors and activities

 

Resilient and Innovation Stimulating Legislations

 

With regard to the operational benefits that the system seeks to achieve, they are related to specialized and sectoral works, the key of which is facilitating innovation and development of new or unconventional financing methods, especially with the Sultanate of Oman’s quest for giant and medium-sized national projects. The manifestation of such benefit is represented by the tasks assigned to the FSA, whereas the FSA may temporary sanction implementation of services, activities or licenses in preparation for issuing new relevant legislations. The law emphasizes in its provisions the need for the FSA to create the appropriate environment for innovation to render services and products that meet the needs of society, as new financial products and instruments can be developed, including innovative investment and insurance products and services based on Fintech that are consistent with the current economic situation.

 

In order to ensure  financial stability in the regulated  sectors the law  authorized taking the necessary measures and procedures and imposing penalties in accordance with the regulations issued in this regard, in the event of a risk threatening the stability of the capital market, the licensed markets, the insurance market or any of the regulated  financial sectors, activities or services and such powers contribute to deepening the growth of the regulated companies and enterprise, and their expected growth during the forthcoming decades, which would contribute to developing the performance of private sector institutions.

 

New Identity

 

 

On the occasion of restructuring  the financial services sector with the issuance of the Royal Decree regarding the establishment of the Financial Services Authority and the issuance of its law, the FSA launched its identity to convey the concept of  a national government body that has strong relationship  with the world around it, and moving assertively on its way to consolidating the strategic role it plays, as it regulates and supervises the non-banking financial sector Including the capital market, the insurance market,  accounting and audit firms, thus contributing to the creation of a safe and integrated investment environment, which supports the formation of a life of prosperity and well-being in the  Sultanate of Oman

 

 

The idea for the FSA’s logo is derived from the elegant and strong knob of the gates of the Sultan Qaboos Grand Mosque. The knob symbolizes the firmness and confidence, and the gate symbolizes security and commitment, and at the same time the link between internal potential and external prospects, all of this through the elegant and strong knob, and this is the role of the Financial Services Authority of the Sultanate of Oman. This symbol has inspired the creation of a unique visual identity and a unique brand by blending authenticity and modernity, the present and the future, between the constants of the Omani identity and the fundamentals of regulatory and supervisory work, to form safety, peace of mind, confidence and resolve.

 

The new identity highlights the values, personality, and tone that make up the methodology through which the FSA exercises its supervisory, regulatory, and developmental roles for the financial sectors it supervises, whereas independence, integrity, ambition, and inclusiveness constitute the values of the identity, while leadership, experience, realism and awareness highlight the institutional character of the FSA in carrying out its tasks and fostering its strategy, expressing in its entirety that the FSA is an inspiring, unwavering, reassuring and confident institution in its steps, transactions, and its endeavor to set out  a  legislative system that enhance the effectiveness of the regulated entities  in developing the  services and products for the public, so that we can all move forward with confidence.