Guernsey Press

GFSC powers to again be debated in States

THE powers of the Guernsey Financial Services Commission are set to be debated by the States again – just weeks after the Commission was rocked by a highly critical judgment in the Royal Court.


Draft legislation has been submitted to the Assembly which, if approved, would hand the Commission power from 7 July to set its own fees, from which it receives income from regulated businesses.

The Commission set fees itself until 2015, when the function was taken over by the States in the wake of an earlier round of criticism about the Commission’s approach and use of powers.

Gavin St Pier – the only deputy to vote against giving fee-setting powers back to the Commission when the idea was initially debated earlier this year – has urged other States members to think again ahead of their debate on changing the law, which is likely to take place in June.

‘I would encourage members to re-read the original 2014 policy letter to understand the rationale and question whether the change is really needed,’ he said.

‘It is frustrating that time and scarce resources have been devoted to prioritising this u-turn over more important issues. I will, of course, study the final legislation in detail and not be afraid to seek to amend or vote against it if I see fit, even if I am the only one to do so again.’

Ahead of the vote at policy stage in March, P&R argued it was necessary to change the law on fee-setting powers before the European agency Moneyval carried out a key inspection of the island’s defences against financial crime next year.

It said the existing arrangements were ‘likely to be viewed negatively by any external body examining the efficacy of the regulation of the financial sector...[and] could call into question the independence of the Commission from the States’.

Deputy St Pier said yesterday that P&R had used the Moneyval visit as a ‘bogeyman’ to make the States fearful of the consequences of rejecting its proposals.

‘Extensive work was undertaken in 2014 to establish the current regime where fees are set by P&R after consultation with the Commission rather than the other way around, which is what happened before. This was done for very good reason at the time,’ he said.

‘The Commission opposed the decision of the States then and nothing has changed since.

‘So I was not particularly surprised that the bogeyman of the Moneyval visit was used opportunistically to get the States to shift the power back to the Commission.

‘However, if the Assembly ever found itself using its theoretical powers to annul and vote down the Commission’s fee regulations, ironically it could look to the outside world as political interference, which is precisely the risk that it was argued needed to be avoided.’

Since the original vote in the States, the Commission has come under fire following a Royal Court judgment which went against it in a high-profile case in which it imposed lengthy directorship bans and large fines on three senior figures at locally-owned trust company Artemis.

Lt-Bailiff Hazel Marshall struck down the bans, suggested the fines should be reduced and fired a warning shot to the Commission about its approach.

She said the Commission was at risk of putting too much emphasis on being firm and not enough on being fair.

‘It is important both that the Commission is independent of influence by government and that the independent judiciary are free to challenge the decisions of the Commission whose powers, including in relation to fee-making, cannot be unfettered,’ said Deputy St Pier.