20th January 2005 - Gibraltar’s Financial Services Commission welcomes the publication today of the report of the review team appointed by His Excellency the Governor under Section 12A of the Financial Services Commission Ordinance 1989.
This is the third review commissioned under the Ordinance and was requested by the Commission, in light of the rapidly changing regulatory environment in the United Kingdom. The Commission is obliged by its founding Ordinance to match UK standards of supervision. The FSC considers it important for it to seek independent verification that it continues to keep pace with these developments.
A "good standard of financial services regulation"1 was highlighted in the report, which concluded that Gibraltar had a "regulatory regime developed to a good standard and staffed by competent regulators with a manifest determination to improve performance further."2
Commissioner Marcus Killick said:
"We are naturally pleased that the Commission’s hard work to maintain a robust regulatory regime has been independently validated. We particularly welcome the commendations over our recent enhancements of that regime as well as the support given to our proposals for the future.
The report makes a number of recommendations which will be considered. Many concern matters on which we were already taking action. Others will no doubt help us in our future development..
The FSC is the only regulator that is judged, not only against international standards, but also on how we match the policies and practices of another vastly larger authority, which supervises one of the biggest financial sectors in the world.
It is a tremendous tribute to the team that with 18 staff we have received such a positive report. Nevertheless, we recognise the need to continue our work, particularly in view of the fact that regulatory standards around the world continue to change.
EU and other international regulatory standards constantly evolve. We must continue to meet them in an efficient, effective and appropriate manner, which meets the needs of the financial sector of Gibraltar and the consumers it serves.
As part of our commitment to transparency we are publishing our responses to the individual recommendations in the report on our website and will regularly update these so that our stakeholders can monitor our progress."
Four key areas of the FSC’s work were considered by the review team: Anti-Money Laundering, Banking, Insurance and Investment Services.
The report concluded that the Commission’s supervisory activities, for both Insurance and Investment services, established and implemented standards that substantially matched UK legislation and practice. Recommendations were made as to how the FSC could readily make the remaining adjustments necessary to bring the FSC fully into line with recently introduced UK regulatory developments. The Commission’s work towards achieving this goal is already underway.
The team was also satisfied that the Commission’s approach to banking supervision had succeeded in developing an effective supervisory structure that established standards which met its obligations under the Financial Services Commission Ordinance to match those required by UK legislation and supervisory practice.
Gibraltar’s anti-money laundering regime was judged more robust than that of the UK in a number of areas, "even taking into account the different risks posed by the business."3
Some of the report’s recommendations fall outside of the Commission’s control, including asking the Financial Services Authority to keep the Commission fully informed on UK regulatory developments The Commission will be drawing these ideas to the attention to the FSA and other relevant authorities.
The findings of the report follow previous favourable reviews undertaken of the Commission.
In 2001, the IMF found that the Commission "carries out its duties diligently and has an intimate knowledge of the institutions under its supervision. The results of our assessments indicated that supervision is generally effective and thorough and that Gibraltar ranks as a well-developed supervisor." In 2001, an FATF report concluded that "Gibraltar has in place a robust arsenal of legislation, regulations and administrative practices to counter money laundering."
Commission Member Franco Cassar4 has also welcomed the report.
"This is good news for Gibraltar’s financial services sector which is based on sound regulatory practice.
It is also a tribute to the sensible, practical, and effective regulatory system which has been implemented here by the Commissioner and his team.
This independent assessment of the FSC’s regulatory performance demonstrates that we continue to strike the careful balance between the need to protect the consumer and allowing businesses the freedom to operate successfully in a highly competitive world market.
The report also makes clear that Gibraltar’s regulatory approach significantly matches and in some cases exceeds the standards accepted as best practice in the UK."
Gibraltar’s Chamber of Commerce has congratulated the FSC on the report. Peter Isola, President of the Gibraltar Chamber of Commerce, said :
"The review is an impartial endorsement of the international standards which we operate in Gibraltar. It fully justifies the confidence that the business community has in the FSC’s supervision of the financial services sector on the Rock.
The report clearly shows how effective the FSC has been in maximizing its comparatively small resources to achieve this level of regulation."
Legal and finance professionals have welcomed the report into the FSC. Tony Provasoli, Chairman of the Gibraltar Finance Centre Council said:
"The reputation of the Rock depends on confidence and this report provides independent verification that the regulatory regime in Gibraltar is deserving of this confidence
I believe that regulation, nevertheless, is a delicate balance between applying high standards and reacting to market needs. The fact that we achieve this in Gibraltar is a credit both to the Commissioner himself and his team."
Footnotes
1 Paragraph 1.5
2 Paragraph 1.7
3 Paragraph 45
4 Mr Cassar is the Managing Director of SG Hambros Bank (Gibraltar) Limited and has also served as the President of the Gibraltar Bankers Association.
Notes to editors: The executive summary, the full report and the FSC’s responses to the recommendations made therein can be downloaded from the FSC’s web-site at www.fsc.gi/review/downloads.htm.