GFSC’s legal bill leaps, but it refuses to be ‘out-lawyered’

William Mason, the director-general of the Guernsey Financial Services Commission, said that the regulator had needed to ‘retain external counsel to pursue a number of long drawn out enforcement cases against well-resourced opponents’.

Writing in the commission’s latest annual report in general terms, he added: ‘As we have noted in the past, we will not let our enforcement team be out-lawyered as, sadly, were we to accept such a situation, the guilty would tend to walk free.’

The GFSC’s legal and professional fees totalled £820,725 in 2018 compared with £536,824 in 2017, according to its annual report and financial statements for the year ended 31 December 2018.

The GFSC said it encountered a range of issues across all types of firms in relation to operational risk, governance, business strategy, conduct towards consumers and financial crime controls.

For the most part, these were dealt with through risk mitigation programme actions asking the entities to improve and report on the improvements to the commission.

‘We issued 266 of these actions over the course of 2018 with a further 288 actions being satisfactorily concluded. These numbers should be seen in the context of the 4,686 legal entities covered by our regulation.

‘Unfortunately, some of the issues we uncovered as a result of our supervisory activities did not lend themselves to firm-led remedial action, either because of their severity or breadth, our perspective on the competence of the management at the firms in question or because they involved repetitive law-breaking,’ added Mr Mason.

‘For this reason, supervisors referred seven firms or individuals to our enforcement division for investigation prior to the consideration of whether formal sanctions for law-breaking should be applied.

‘During the course of the year the enforcement division concluded six cases which, taking into account the number of cases that stretch over more than one year, means that it had 13 cases outstanding at the end of the year.

‘A number of the cases have been unusually contested or complex, which accounts, to a great extent, for the considerable increase in our expenditure on lawyers shown in the accounts.

‘Whilst we have a small number of very capable in-house lawyers, we are not resourced to pursue all enforcement cases using internal legal staff and we will continue to outsource the legal support of some major cases to external lawyers to ensure that the public interest is as well represented as those against whom the enforcement action is being taken.’