Court of Appeal upholds GFSC’s role as it overturns judgment

In a ground-breaking case last spring, senior officers at Artemis Trustees successfully appealed prohibition orders and had the fines imposed on them reduced. The decision was seen as highly significant for the financial services sector in Guernsey and was supported by many in the industry.

But three judges from the Guernsey Court of Appeal have sent the case back to the GFSC to be heard again by one of its senior decision makers, likely to be a respected judge from the UK.

The Appeal Court said it disagreed with the judgment of Lt-Bailiff Hazel Marshall that the commission had acted inappropriately and that it was treating compliance with rules and regulations as ‘a matter of form and process’.

They also had concerns about the decision reached against three Artemis individuals by senior decision-maker Russell Finch, describing it as flawed.

They were clear about the importance of the commission’s role in supporting the finance sector.

‘The financial services industry is an extremely important part of the economy and culture of Guernsey. ‘It is in Guernsey’s interests to be a location which observes the highest ethical standards,’ said Judges Jonathan Crow, David Perry and Sir Adrian Fulford.

‘In our judgment, this point cannot be overstated and it is legitimate for the GFSC to approach its role as a regulator with this in mind. It has been given wide-ranging powers to enforce and uphold good practice in order to ensure that the Bailiwick’s reputation is enhanced and the public are protected from undesirable practices.’

The commission welcomed the judgment and said it was grateful to industry figures and associations who supported the commission in pursuing its appeal.

‘We are pleased that the Guernsey Courts, through this judgment, have reaffirmed the importance they attach to seeing the laws combatting money laundering and terrorist financing properly applied,’ it said.

Director-general William Mason added: ‘We seek to be a risk-based and proportionate regulator. We don’t pretend we will never make mistakes and, when we do, we will seek to learn from them. ‘We do not use enforcement tools lightly but if the Bailiwick is to continue to be a hospitable place for commerce, an attractive place in which to do business to well-understood high standards for the benefit of the global commons, there must be respect for the Bailiwick’s law under which such business is transacted.’

The three individuals at the centre of the Artemis case have said that the enforcement process in the island must change after learning that their celebrated challenge to enforcement action through the courts has been overturned by the Guernsey Court of Appeal.

Ian Domaille, Ian Clarke and Margaret Hannis were all prohibited from holding senior roles in financial services businesses and fined for their involvement in fiduciary business activities investigated by the Guernsey Financial Services Commission. They challenged the process and won last year, before the case was overturned on appeal.

In a statement yesterday they said they were disappointed at the verdict, particularly as the court’s judgment pointed to a ‘fundamentally flawed procedure’ they had been involved with over a ‘gruelling’ four and a half years.

They highlighted how the judgment pointed to ‘substantial flaws’ in the senior decision-maker process. Their case is now to be referred to a new senior decision-maker on the GFSC’s roster.

They also said that advice to the GFSC from the Appeal Court judges was also a ‘sad reflection of the process’.

‘We understand this is not the first time that the SDM process has been criticised. Our only hope is that the commission and the States of Guernsey will see fit to change the process so that it is fair to all parties, but the commission’s announcement today suggests that this is a vain hope.

‘The process that we are forced to follow in Guernsey is far less independent and fair than the equivalent process in the UK and it needs to be reviewed urgently so that other industry professionals are not put through the same harrowing experience.

‘The referral by the Court of Appeal back through the process that they themselves have described as flawed is the most disappointing aspect of this judgment.’