'At risk of' is at risk of disrepute
RATHER like the emergency powers law which allows the States to act at the risk of a potential emergency occurring, so the powers of the Guernsey Financial Services Commission have consistently allowed the regulator to act decisively where it deems there is a 'risk of reputational damage to the Bailiwick'.
There is risk of potential issues in many things that we do every day. Relationships and transactions in financial services come with risk. Part of the job is to assess and mitigate that risk to an acceptable level.
The critical judgment of the Royal Court in the appeal brought by directors at Artemis Trustees highlighted the significant prohibitions and fines involved for the offence of causing a ‘risk of reputational damage’, even when none actually occurs.
Lt Bailiff Hazel Marshall translated the commission’s approach as laying charges of ‘not meeting regulations of form and process’, masquerading as a risk of reputational damage, which actually caused no practical damage or detriment to anyone.
‘It must surely be appropriate to consider whether the shortcoming was actually courting disaster, or was simply a failure to make a rather banal record and produce paperwork,’ she said.
Whether it is proper to pursue enforcement action against firms and individuals for breaches of process is one thing. But one of the implications of the judgment, if it passes a commission appeal, is surely likely to be a reduction in the use of ‘a risk of’ in assessing offences and punishment.