New, wide-ranging fee increases by the Bermuda Monetary Authority have been approved by the Bermuda Government.

However, the changes will be phased in over a three-year period rather than two years as had originally been proposed.

A review this year concluded that the BMA will require up to 39 additional full-time staff by 2020 to continue effectively discharging its duties, while its annual operating costs have been projected to rise to $61 million by 2020, up $11.7 million on last year.

Against this backdrop, Curtis Dickinson, Minister of Finance, passed an order in the House of Assembly on Friday that provides for amendments to the fees charged by the BMA.

Insurance and reinsurance companies, banks, corporate service providers, trusts and credit unions will be among those affected by the changes.

Mr Dickinson made reference to the review conduced by the BMA with assistance from an international consulting firm, that resulted in fee change proposals.

The authority recorded a budget deficit of $1.63 million last year, its fifth annual shortfall in the last decade. It expects to record a further operating loss this year. It has previously covered budget shortfalls from its general reserve account. Last year its reserves shrank by $2.1 million.

As a regulator, the BMA works to protect and enhance Bermuda’s reputation and position as a leading international financial-services centre. It has said it is enhancing its risk-based supervision approach, coverage and service levels; meeting evolving international standards, but to do so it needs to further enhance its operations and add to its supervisory resources. One way this can be achieved is by raising fees.

Mr Dickinson said the BMA recognised market conditions remain challenging in a number of regulated sectors, and this had been taken into account when the proposed revised fees were assessed.

During the global financial crisis that started around 2008, and continuing in recent years, fee increases by the BMA were moderated to reduce the impact on the financial-services industry. Mr Dickinson said: “This has, however, contributed to the authority operating at a deficit, with resultant budget shortfalls being covered from existing reserves.”

He added: “Consequently, certain existing fees will be adjusted and/or new fees be introduced to reflect the authority’s resource utilisation for these ongoing supervisory activities. Also, the basis on which fees are charged will be simplified so that entities will find it easier to determine what fees they need to pay.”

One of the four guiding principles that will inform the revised fees is the need for the island to maintain its competitiveness and “account for pricing relative to peer regulatory bodies to ensure Bermuda remains competitive”.

Mr Dickinson said that during the consultation process and subsequent meetings between the BMA and industry stakeholder groups, the most prevalent comment was the need for the fee changes to be phased in over a longer period of time, which has resulted in the proposed timescale being altered from two years to three.

He added: “The insurance industry’s request that the authority have greater flexibility regarding fees to be applied in specific circumstances, such as where affiliated insurers have similar risk profiles and in cases where combined application fees would otherwise be payable, has also been addressed via separate creation [in the Insurance Act] of a power to exempt or reduce fees.”