STATUTORY OR SELF-REGULATION: THE NIGERIAN EXPERIENCE BY G. A. OGUNLEYE MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER NIGERIA DEPOSIT INSURANCE CORPORATION

INTRODUCTION Financial institutions are regulated by government agencies which are referred to as statutory regulators. The objectives of statutory regulation include: protecting depositors, ensuring monetary stability, protecting consumers and preventing the collapse of the payments system.

INTRODUCTION Cntd. Statutory regulation’s limitations include information asymmetry, high cost and inadequate disclosure requirements, hence the need for self-regulation. self-regulation is based on self-control and self-conviction.

STATUTORY REGULATORY FRAMEWORK IN NIGERIA Regulatory Instituions The financial services industry in Nigeria is made up of three main sub- sectors, viz: banking, securities and insurance each with an apex regulatory institution. The apex regulators are the CBN, SEC and NAICOM, respectively.

STATUTORY REGULATORY FRAMEWORK IN NIGERIA Cntd. Regulatory Approach Statutory Regulation commenced with compliance-based approach. Consultative approach is currently being adopted. Nevertheless, the Regulatory authorities maintains a policy of zero tolerance for abusive and unethical conduct.

THE PRACTICE OF SELF- REGULATION IN NIGERIA the practice of self-regulation in Nigeria seeks to foster the emergence SROs. In the banking industry, professional bodies like Chartered Institute of Bankers of Nigeria (CIBN) and the Money Market Association of Nigeria which are being encouraged to become SROs. CIBN issued a Code of Banking Practice in pursuance of its mandate to promote professionalism and high ethical standards in the conduct of banking business Also, Ethics and Professionalism Sub-committee of Bankers Committee issued a code of banking practice in 2003.

THE PRACTICE OF SELF- REGULATION IN NIGERIA Cntd. In the capital market, NSE sets rule of ethics to guide the conduct of its members. In the insurance sub-sector, Nigerian Insurers Association (NIA) and the Nigeria Corporation of Insurance Brokers (NCIB) serve as SROs.

STATUTORY REGULATION OR SELF-REGULATION IN NIGERIA? Because of the observed limitations of the statutory regulation, coupled with the introduction of universal banking, advances in IT, proactive measures are being taken to promote self-regulation to complement statutory regulation in Nigeria. Self-regulation does not, however, imply elimination of regulatory controls and supervision.

CONCLUSION Today’s deregulated financial markets require both statutory and self-regulation in order to ensure the achievement of statutory regulatory objectives in all jurisdictions.