LN 260/23 Financial Services Act 2019 (Amendment No. 5) Regulations 2023

Type: Subsidiary Legislation, Amendment. Made under: sections 5, 620, and 627, Financial Services Act 2019

Commencement: Day of publication in Gazette (07/09/2023)

Summary of effect: These Regulations amend schedule 2 to the Financial Services Act 2019 to make safeguarding and administering financial instruments its own regulated activity, instead of an ancillary activity. These regulations also create new regulated activities of buying, selling, subscribing for or underwriting a financial instrument, structured deposit or contract of insurance; and agreeing to carry out any activity which is a regulated activity under schedule 2 to the Financial Services Act 2019. These regulations also clarify that any person with a permission for effecting or carrying out contracts of insurance as principal may also carry out a number of ancillary activities set out in paragraphs 48-54B of schedule 2 to the Financial Services Act 2019.

Effect more particularly: These regulations amend the Financial Services Act 2019 to:

  • Allow a person with a permission for effecting or carrying out contracts of insurance as principal to also, by virtue of that permission, carry out those activities specified in paragraphs 48-54B of schedule 2. These activities include receiving, transmitting, and executing orders, dealing on your own account, portfolio management, investment advice, underwriting, placing with or without a firm commitment basis. This also takes effect for currently existing permissions;
  • Amend the definition of 'insurance distribution'. One activity which is caught by this definition is assisting in the administration and performance of contracts of insurance. The new definition clarifies that the assistance which is caught by the definition is assistance to the parties to the contract of insurance. The new definition also provides an indicative, non-exhaustive list of matters which may constitute assisting the parties to a contract of insurance;
  • Remove as an 'ancillary service' the safeguarding and administration of financial instruments for the account of clients. This service is no longer included in the regulated activity specified in paragraphs 48-56 for those persons who carry on such regulated activities. The activities specified in paragraphs 48-56 include receiving, transmitting, and executing orders, dealing on your own account, portfolio management, investment advice, underwriting, placing with or without a firm commitment basis, and operating an MTF or an OTF;
  • Instead, safeguarding and administering another's financial instruments or certain types of life insurance or arranging for someone else to safeguard and administer another's financial instruments or certain types of life insurance is its own regulated activity. This regulated activity only captures safeguarding and administration of investments which are a security or a contractually based investment. As this is an ancillary activity, the Financial Services (Investment Services) Regulations 2020 have been amended to clarify that the GFSC may not grant a permission solely in respect of this activity;
  • Create a new regulated activity under the topic of investment services and investment activities. The new regulated activity is making arrangements with a view to a person who participates in them buying, selling, subscribing for or underwriting a financial instrument, structured deposit or contract of insurance. This does not capture certain activities which are listed in full in the new subparagraph 54A(4); and
  • Create a new category of regulated activity: agreeing to carry out any activity which is a regulated activity by virtue of schedule 2. However, certain activities are excluded from this new regulated activity, such as accepting deposits, issuing electronic money, effecting or carrying out contracts of insurance, operating an MTF or an OTF, administering a benchmark, managing a UCITS, acting as depositary, trustee or sole director of UCITS, managing an AIF, acting as depositary of an AIF, and establishing or winding up a pension scheme.

LN 261/23 Financial Services (Restricted Promotions) Regulations 2023

Type: Subsidiary Legislation. Made under: sections 620, 621, and 627, Financial Services Act 2019

Commencement: Day of publication in Gazette (07/09/2023)

Summary of effect: These Regulations prohibit a regulated firm from marketing a speculative illiquid security (as defined by the regulation: a sort of debenture or preference share) to retail clients. There are certain exemptions to this prohibition, allowing certain people to promote speculative illiquid security to certain people.

Effect more particularly: These regulations:

  • Prohibit a regulated firm from communicating or approving a financial promotion in relation to a speculative illiquid security where that financial promotion is addressed to or disseminated in such a way that it is likely to be received by a retail client;
  • Define a speculative illiquid security is defined as a debenture or preference share with a denomination or minimum investment of less than £100,000, and has been issued to use some or all of the proceeds to provide loans or finance to any person other than a member of the issuer's group, to buy or acquire investments or real property, or to pay for or fund the construction of real property; and
  • Provide for exemptions to the prohibition for promotion to certain people by high net worth investors, certified sophisticated investors and self-certified sophisticated investors. There are also exemptions for certain 'one-off' financial promotions which are not cold calls, personal quotations or illustration forms, financial promotions which originate outside Gibraltar and are not capable of having an effect in Gibraltar, and financial promotions that would be exempt if it were communicated by an unauthorised person, or (for financial promotions from outside Gibraltar) if the office from which the financial promotion is communicated were a separate unauthorised person.

LN 262/23 Proceeds of Crime Act 2015 (Amendment No. 2) Regulations 2023

Type: Subsidiary Legislation, Amendment. Made under: sections 184 and 184ZA, Proceeds of Crime Act 2015

Commencement: Day of publication in Gazette (07/09/2023)

Effect: These Regulations amend the Proceeds of Crime Act 2015 to classify the submission of an application for a person to become a Category 2 individual as a relevant financial business. Therefore, businesses which submit such applications are now subject to duties under the Proceeds of Crime Act 2015.

LN 264/23 Financial Services (Payment Accounts) (Amendment) Regulations 2023

Type: Subsidiary Legislation, Amendment. Made under: sections 620, 626, and 627, Financial Services Act 2019 and section 11, European Union (Withdrawal) Act 2019

Commencement: Day of publication in Gazette (07/09/2023)

Summary of effect: These Regulations amend the Financial Services (Payment Accounts) Regulations 2020 to delete some EU-derived provisions on the switching of payment accounts within Gibraltar.

Effect more particularly: These regulations amend the Financial Services (Payment Accounts) Regulations 2020 to delete some EU-derived provisions on the switching of payment accounts within Gibraltar, including:

  • The requirement for payment service providers to provide a switching service between payment accounts held by consumers in Gibraltar, in the same currency;
  • The provisions regulating how the switching service should be provided;
  • The obligation for payment service providers to reimburse a consumer for any financial loss they incur because of a service provider's failure to comply with the requirement to provide a switching service or the requirements for what the switching service should entail; and
  • The requirement to make information about the switching service available without charge.

B 23/23 Energy Performance of Buildings (Amendment of Regulations) Bill 2023

Type: Bill, Amendment

Effect: This Bill, if passed into law, would create a power for the government to make regulations to amend the Environment (Energy Performance of Buildings) Regulations 2012 (the 'Regulations') for 'such purposes as the Government deems fit'. There is an indicative but non-exhaustive list of amendments that the government would be able to make under this general power, relating to charging and recovering fees if obligations under the Regulations are not met.

Extraordinary Gazette GG5086 8th September 2023

LN 266/23 Financial Services (Insurance Companies and Credit Institutions) (Amendment) Regulations 2023

Type: Subsidiary Legislation, Amendment. Made under: sections 620, 621, 626, and 627, Financial Services Act 2019

Commencement: Day of publication in Gazette (08/09/2023)

Summary of effect: These Regulations amend two pieces of financial services legislation to prevent insurance or reinsurance undertakings and credit institutions from making a dividend payment unless they notify the GFSC at least 30 days before the payment is proposed to be made, and the GFSC does not object to the making of the dividend payment. Such an objection by the GFSC can be appealed under section 615 of the Financial Services Act 2019 as if it were a decision notice.

Effect more particularly: These Regulations amend two pieces of financial services legislation as follows:

The Financial Services (Insurance Companies) Regulations 2020 are amended to:

  • Prevent an insurance or reinsurance undertaking from making a dividend payment unless it notifies the GFSC at least 30 days before of the intention to make the dividend payment, and the GFSC has not objected to the dividend being paid. A dividend payment here includes a distribution of capital of any kind, including capital repayments for a loan to a parent or holding company or the returns of premiums to the members of a mutual insurer.
  • Allow the GFSC to object to the payment of such a dividend payment by issuing an objection notice, which must be given to the insurance or reinsurance undertaking not less than 15 days before the day on which the dividend payment shall be made. The objection notice takes effect immediately but can be appealed under section 615 of the Financial Services Act 2019 as if it were a decision notice.

The Financial Services (Credit Institutions and Capital Requirements) Regulations 2020 are amended to:

  • Prevent a credit institution from making a dividend payment unless it notifies the GFSC at least 30 days before of the intention to make the dividend payment, and the GFSC has not objected to the dividend being paid. A dividend payment here includes a distribution of capital of any kind, including capital repayments for a loan to a parent or holding company.
  • Allow the GFSC to object to the payment of such a dividend payment by issuing an objection notice, which must be given to the credit institution not less than 15 days before the day on which the dividend payment shall be made. The objection notice takes effect immediately but can be appealed under section 615 of the Financial Services Act 2019 as if it were a decision notice.

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