FY21 audit report for FD: There’s need to reform SECP: PAC

ISLAMABAD: Public Accounts Committee Chairman Syed Naveed Qamar on Tuesday urged the government to reform and empower the Securities and Exchange Commission of Pakistan (SECP), enabling the regulatory body to recover penalties directly from companies through attachment of bank accounts instead of filing references in courts.

The SECP-related issues were examined by the Public Accounts Committee (PAC), chaired by Naveed Qamar, during a session focused on the Audit Report for the Finance Division for the fiscal year 2020-21.

The PAC committee Chairman stated that the time has come to amend the SECP laws. There is a need to reform the SECP, “I do not want to interfere in the affairs of the autonomous organizations, but reforms in the SECP are necessary.”

Senior officials of the SECP informed that the SECP filed references in the High Courts for the recovery of penalties from the companies. The other option is to recover through an alternative dispute resolution mechanism (ADRC). Unfortunately, we cannot make recoveries like the Federal Board of Revenue (FBR).

The Chairman of the committee was shocked to hear that the SECP has no power to directly recover penalties from companies in cases of non-compliance.

Auditor General of Pakistan informed that Section 40A of the SECP Act, 1999, states that all fines and penalties recovered by the Commission shall be credited to the Federal Consolidated Fund. The management of the SECP imposed penalties of Rs 55.927 million during the period 2019-20, from which only Rs 6.147 million stood recovered. An amount of Rs 49.780 million was outstanding as penalties imposed on the violators.

The SECP replied that Section 42B of the SECP Act provided different modes for recovery of penalties; therefore, the commission had approved a standing operating procedure (SOP) to recover the penalties. However, the reply of the SECP was not accepted by the Audit.

The SECP has been directed to vigorously pursue the cases of outstanding recovery.

Another audit objection was raised that the SECP did not remit surplus funds of Rs 423.474 million over the actual expenditure to the Federal Consolidated Fund (FCF) during 2019-20.

An SECP Commissioner responded that the SECP is closely working with the Finance Division to resolve the said issue. Presently, the SECP is operating without a Chairman.

Copyright Business Recorder, 2025