Who will regulate the regulator?
‘WHO regulates the regulator?’ is a question often raised when our financial services industry has an issue with the Guernsey Financial Services Commission. It reflects concerns raised, on and off, about the commission’s approach to regulating the island’s economic lifeblood.
It has not always been a happy relationship. But tension between the two could be argued as being healthy. Industry, and its promotional agency, has often cited responsive and effective regulation as a major selling point.
While the supervisory relationship, many say, rubs along pretty well, industry fears its enforcement arm, and despite regular reassurances, fear that being snarled up in enforcement won’t end well. Enforcement that, as the judgment highlights, could well be career-ending and financially damaging to retirement plans.
The Royal Court judgment raises serious concerns about how the commission approaches enforcement, and certainly anyone contesting such proceedings. Now, if the GFSC’s appeal fails, the question is how the commission might be brought into line.
A few weeks ago the States gave the GFSC back its power to set its own fees without government involvement, after the commissiom said Moneyval inspectors would consider it political intervention. Which makes the question of ‘who regulates the regulator’ even more urgent.