The regulator said the increase, pencilled in for 2022, was required because ‘regulatory inflation’ globally was running ahead of its current financial base.
Action was also needed to help further prepare for a visit by international regulatory inspectors who can make or break jurisdictions’ reputations, plus pay for a slight increase in officer numbers as well as retain existing staff.
Resources had been cut into with little to spare because of pressures, warned the regulator, and inaction over fees could have severe implications.
‘If the commission is unable to increase its fees by 10.1% it would risk compromising on the execution of its mandate,’ said the regulator.
That in turn, could draw the ire of international regulatory bodies and risk affecting Guernsey’s attractiveness as a place to do business.
Failure to meet international standards could hamper the ability of Guernsey-based companies to do business, said the GFSC in a consultation document issued to business on the fee proposals.
‘Currently, the commission observes more than 40 recommendations and 117 principles from over 655 pages of standards. In doing so we needed to consider more than 4,000 pages of guidance, framework and application advice.
‘While the commission seeks to apply all international regulatory standards in a proportionate manner, those standards and their underlying requirements keep on growing both in terms of scale and complexity.
‘Without skilled policy officers within the commission, it might be all too easy to unthinkingly copy out standards when it is in the interests of all that we have the capacity to consider how the relevant international standards may be implemented in a fashion which fits best with the Bailiwick’s financial services sectors. Intelligent implementation of standards is one of the ways in which we seek to ensure that firms’ compliance costs are
‘Balanced with this however, is the fact that the commission, and in turn the Bailiwick, needs to keep up to date with these standards to demonstrate adherence to international norms and thus ensure that overseas clients are able and willing to do business here.’
It also highlighted the forthcoming visit of international regulatory inspectors who determined the Bailiwick’s level of compliance with global standards. They issued reports which could have ‘detrimental consequences’ for jurisdictions deemed to have fallen below expected norms.
‘A key forthcoming inspection of the Bailiwick is due to be undertaken by Moneyval, assessing against the Financial Action Task Force (FATF) standards, in 2023/24.
‘The preparatory work required for these visits is extensive and key to helping the Bailiwick demonstrate its observance of international standards on anti-money laundering and countering terrorist financing.’
But meeting international regulatory standards was ‘not easy’ – and required enough capable and motivated GFSC officers with sufficient resources to regulate Guernsey’s large, prosperous and diffuse financial services sectors.
The GFSC also said it needed to remain on top of technology developments and ensuring regulation was ‘fit for purpose’ to ensure the finance industry could continue to prosper.
Having the right staff paid the right amounts with the right technology would give the regulator ‘a good chance’ of meeting statutory duties sensibly and be able to demonstrate to influential international bodies such as Moneyval that the Bailiwick was appropriately regulated.