Guernsey Press

GFSC chief: ‘Regulation must not stifle ability to innovate’

GUERNSEY’S financial services regulator has spoken about the importance of implementing international standards in a ‘sensible and proportionate’ way.

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The GFSC’s William Mason. (Picture by Adrian Miller, 22622789)

William Mason, Director-General of the Guernsey Financial Services Commission, pictured, also acknowledged a perception that regulation in some jurisdictions had gone too far – and stressed the importance of ensuring sufficient flexibility to allow innovation.

In an article for a special Guernsey Press supplement on the island’s economy, published tomorrow, Mr Mason also spoke about his first-hand experience of the international financial crisis a decade ago as a UK regulator and reflects on it 10 years on.

‘Over a range of areas, there is a perception that regulation has gone too far and it is certainly the case that the balance isn’t quite right if the boards of firms are finding they have to spend much more time on regulatory compliance than on growing the business and innovating to stay competitive.

‘I particularly worry about bureaucratic administrative requirements which can become value-free, make-work exercises,’ said Mr Mason.

‘One of the reasons for the lack of productivity growth in the UK may perhaps be because of the growth in such requirements.

‘I appreciate that these are sometimes needed to achieve the policy outcomes you desire but I still think, as the Better Regulation Task Force argued 13 years ago in Regulation – Less is More, a report to the Prime Minister, that there should be clever ways of achieving a desired policy outcome other than carpetbombing people with forms.

‘Hopefully fintech can help mitigate some of these issues in the future, particularly around the costly anti-money laundering paper trail.’

The GFSC Director-General added: ‘Guernsey’s position on new regulatory developments, as per the recent commitments made by the States of Guernsey to the House of Commons Treasury Select Committee on 12 June 2018, is that it will “adhere to international standards as they emerge and evolve”.

‘I, along with my colleagues at the GFSC, sit on some of the international committees from which these standards emerge. There we work to try and make sure that the standards seek to focus on the policy outcomes which need to be achieved rather than merely imposing further bureaucracy on both firms and regulators.

‘Sometimes we succeed, sometimes we fail or cannot be in the room when the standards are made.

‘Once the standards are made, because of the nature of Guernsey’s financial services sector as an export hub, Guernsey tends to need to implement them to maintain its access to overseas markets, although we can try to work with the States and industry to implement them in a sensible and proportionate manner, taking into account the specialisms of Guernsey’s IFC.’

‘I hope that, going forward, we can work to ensure well-implemented international standards continue to mitigate the risk of a major crisis whilst being flexible enough to allow for innovative and small firms as they will encourage the finance necessary for prosperity whilst challenging oligopolistic practices which tend to work against the citizen’s interests.’

n You can read William Mason’s full article in our special supplement looking at the island’s economy a decade on from the international financial crisis, which will be published tomorrow.

The supplement features a range of senior island figures from business and politics, taking a rear-view look in the mirror as well as what our future could look like.