GFSC: ‘considerable concern’ for firms that break the law

In its annual report, which will be discussed by the States at a future meeting, director general William Mason reports that at the end of last year the financial regulators had 13 enforcement cases open, which was the same as at the start of the year.

In looking back at 2019, Mr Mason said that the level of economic activity was ‘solid, but not outstanding’ during the year.

There were 264 investment sector applications, compared to 295 the year before, while applications in the fiduciary sector continue at a similar level to 2018.

After highlighting some of the GFSC’s initiatives in the areas of supervision and self-assurance, he sounded a note of disappointment.

‘Sadly, there are still a number of firms and individuals whose general conduct and law breaking is damaging.

‘The figure of 13 enforcement cases at the end of the year ‘masks the churn in cases with seven new cases being referred to the Enforcement Division and seven completed over the course of the year with one appeal relating to an earlier case also concluding,’ he said.

‘Of the eight cases concluded, only four led to public sanctions.’

One case was discontinued after an investigation and three more were settled after private warnings were given.

‘The failure of a very small proportion of firms to have effective anti-money laundering controls and to treat customers/investors reasonably, continues to cause us considerable concern and we will continue to focus our finite resources on firms and individuals letting down the Bailiwick in this way,’ said Mr Mason.

In his chairman’s statement, Drs Cees Schrauwers said that his first draft had ‘hit an optimistic note’, but events had overtaken that: ‘These developments have made any forward-looking statements futile,’ he said.

‘Working together and supporting those who are most at risk, we need to get through this period in the best possible shape and the commission is assisting the Guernsey government where it can.’

Mr Mason said the lack of fee increases at the start of 2019 had a ‘predictably negative’ effect on the commission’s bottom line, and this will be compounded during 2020 since this is the second year that there has been no fees increase, and he said there was a high probability of negative real income growth.

‘We finished 2019 with a deficit of about £113,000 and we will expect to run a deficit budget in 2020.

‘This deficit was almost entirely attributable to increased legal costs, costs we will make reasonable endeavours to recover where other actors force us into court based actions in which we would rather not have engaged.’