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Enforcement Powers

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This page explains, in general terms, enforcement by the Commission.  This page is not intended to be an exhaustive explanation of the scope of the Commission’s enforcement powers.  Parties with specific queries concerning the enforcement powers of the Commission should refer to the provisions of the laws listed below, and may wish to consider consulting a professional for further advice / information.

Introduction

Regulation, of itself, does not ensure compliance, that can only be assured by a combination of respect and competence, underpinned by enforcement.  International standards and assessments enjoin or encourage enforcement to ensure compliance, and regulatory performance is invariably coupled with compliance issues.
 
The Commission’s enforcement powers are derived principally from the following legislation:

  1. The Financial Services Commission (Bailiwick of Guernsey) Law, 1987,

  2. The Banking Supervision (Bailiwick of Guernsey) Law, 1994,

  3. The Regulation of Fiduciaries, Administration Businesses and Company Directors etc (Bailiwick of Guernsey) Law, 2000,

  4. The Insurance Business (Bailiwick of Guernsey) Law, 2002,

  5. The Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002,

  6. The Protection of Investors (Bailiwick of Guernsey) Law, 1987,

  7. The Prescribed Businesses (Bailiwick of Guernsey) Law, 2008,

  8. The Criminal Justice (Proceeds of Crime)(Legal Professionals, Accountants and Estate Agents)(Bailiwick of Guernsey) Regulations, 2008,

  9. The Financial Services Commission (Site Visits) (Bailiwick of Guernsey) Ordinance, 2008,

  10. The Protection of Investors (Administration and Intervention) (Bailiwick of Guernsey) Ordinance, 2008, and

  11. The Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008,

in each case, as amended, collectively, for the purposes of this document, “the Regulatory Laws”.
 
The Commission also performs other prescribed regulatory functions under other Bailiwick legislation.  These include:

  1. The Protection of Depositors, Companies and Prevention of Fraud (Bailiwick of Guernsey) Law, 1969,

  2. The Road Traffic (Compulsory Third-Party Insurance) (Guernsey) Law, 1936,

  3. The Road Traffic (Compulsory Third-Party Insurance) (Alderney) Law, 1950,

  4. The Surf-Riding (Long Boards) (Compulsory Third-Party Insurance) (Guernsey) Law, 1969,

  5. The Vessels and Speedboats (Compulsory Third-Party Insurance, Mooring Charges and Removal of Boats) (Guernsey) Law, 1972,

  6. The Transfer of Funds (Guernsey) Ordinance, 2007,

  7. The Transfer of Funds (Alderney) Ordinance, 2007,

  8. The Transfer of Funds (Sark) Ordinance, 2007,

  9. The Companies (Guernsey) Law, 2008,

  10. The Companies (Alderney) Law, 1994,

  11. The Foundations (Guernsey) Law, 2012,

  12. The Limited Liability Partnerships (Guernsey) Law, 2013,

  13. The Limited Partnerships (Guernsey) Law, 1995,

  14. The Companies Securities (Insider Dealing) (Bailiwick of Guernsey) Law, 1996,

in each case, as amended.
 
The Commission is also responsible for supervising regulated entities’ compliance with the regulatory requirements identified in the minimum licensing requirements of the Regulatory Laws.  These include the requirements of:

  1. The Companies (Guernsey) Law, 2008,

  2. The Companies (Alderney) Law, 1994,

  3. The Road Traffic (Compulsory Third-Party Insurance) (Guernsey) Law, 1936,

  4. The Road Traffic (Compulsory Third-Party Insurance) (Alderney) Law, 1950,

  5. The Surf-Riding (Long Boards) (Compulsory Third-Party Insurance) (Guernsey) Law, 1969,

  6. The Vessels and Speedboats (Compulsory Third-Party Insurance, Mooring Charges and Removal of Boats) (Guernsey) Law, 1972,

  7. The Steam Boilers (Insurance) Ordinance, 1952,

  8. The Insurance Business (Financial Guarantee Insurance: Special Provisions) (Guernsey) Law, 1996,

  9. The Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey) Law, 1999,

  10. The Criminal Justice (Proceeds of Crime) (Financial Services Businesses) (Bailiwick of Guernsey) Regulations, 2007,

  11. The Disclosure (Bailiwick of Guernsey) Law, 2007,

  12. The Criminal Justice (Fraud Investigation) (Bailiwick of Guernsey) Law, 1991,

  13. The Terrorism and Crime (Bailiwick of Guernsey) Law, 2002,

  14. The Drug Trafficking (Bailiwick of Guernsey) Law, 2000, and

  15. The Transfer of Funds (Guernsey) Ordinance, 2007, the Transfer of Funds ; (Alderney) Ordinance, 2007 and the Transfer of Funds (Sark) Ordinance, 2007,

in each case, as amended, and Nos. ix-xv collectively (“the Bailiwick AML/CFT regime”).

Commission's Approach To Enforcement

The Commission’s use of its enforcement powers in any case is guided by the Commission’s Enforcement Policy (the “Policy”).  As noted in the Policy, “enforcement” includes all the means available to the Commission to achieve compliance with the regulatory regimes for which it is responsible.
 
Where sufficient and appropriate, the Commission will address regulatory contraventions or misconduct by agreement with the person concerned, through ongoing supervisory processes, and try to agree the implementation of a remedial action plan.
 
Where the nature of the contravention or misconduct is of sufficient seriousness, enforcement measures or a combination of remediation and enforcement measures may be warranted.  Where appropriate, the Commission will engage the party with a view to reaching agreed terms regarding these measures.  The Commission will determine the appropriateness of such engagement on a case by case basis.

Enforcement Measures

The Commission may utilise a range of enforcement measures.  However, please note that a number of the measures below are also used by the Commission in its supervisory capacity.  These enforcement measures include, but are not limited to, the following:
 1.      WARNINGS & PRIVATE REPRIMANDS
The Commission may issue a private written warning, in which the Commission sets out its concerns about a party’s conduct, the identified measures to rectify the situation, and the consequences of repetition or failure to fully remediate those concerns. The power to issue a warning is considered to be an intrinsic part of the Commission’s supervisory functions.
 
The Commission may issue a private reprimand to an entity or a director, controller, partner, senior officer or beneficial owner, registered pursuant to the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008.
2.      LICENCE DIRECTIONS AND CONDITIONS
The Commission may issue directions requiring that certain action be taken or not taken, and/or impose licence conditions, requiring that certain action be taken or not taken. It is a criminal offence to contravene a direction or licence condition, whether agreed to by the party or imposed by the Commission.  Contravention of a licence condition can also be relied upon as grounds upon which the Commission may, and in certain circumstances where the public might be adversely affected will, seek the revocation of a licence.   The Commission may give public notice of the imposition or variation of a direction and the date from which it is effective.
 3.      OBJECTION TO USE OF NAME / DIRECTIONS AND MISLEADING ADVERTISING
The Commission may object to the name that a regulated entity proposes to use or where it has failed to provide the Commission with the requisite notice thereof.  It is a criminal offence to contravene this objection.  The Commission may issue a direction in relation to proposed or actual advertising that it determines to be misleading.   A direction may prohibit the issue of any advertisement or any advertisement of a specified description.  It may also oblige the recipient to take all practical steps to withdraw or modify (in a specified manner) any advertisement or any advertisement of a specified description.
 
A person who issues or causes to be issued, in the Bailiwick or elsewhere, an advertisement that is prohibited or otherwise contravenes a direction, is guilty of a criminal offence.
4.      OBJECTION TO DIRECTORS / CONTROLLERS / SIGNIFICANT SHAREHOLDERS & REFUSAL TO APPROVE DIRECTORS / MANAGERS
The Commission may object to, or refuse to approve, the appointment of a party to a position for which notification or approval is required under the Regulatory Laws. It is a criminal offence to subsequently appoint a party, once the Commission has objected to / refused to approve an appointment.  The contravention of an objection / refusal can also be relied upon as grounds upon which the Commission may issue a direction restricting certain rights associated with certain shareholdings, and /or for a court order to compel or restrict the sale of shares held by a controller or significant shareholder (as applicable).
 5.      PRODUCTION OF INFORMATION & DOCUMENTS, INTERVIEWS & APPOINTMENT OF INSPECTOR
The Commission may require that information be produced, the scope of which being such as the Commission may reasonably require for the performance of its functions.   The Commission may also require the production of a report by an accountant or person with relevant professional skills, on any matter in relation to which the Commission may require information.  Further, the Commission may, in some circumstances, require certain persons to attend interviews with the Commission to provide information.  It is a criminal offence to fail to co-operate with these requirements, without reasonable excuse.
6.     CANCELLATION, REVOCATION & SUSPENSION
The Commission can suspend an existing licence or registration or the authorisation or registration of a collective investment scheme.  The Commission may also cancel or revoke an existing licence, authorisation or registration. 
 7.      PUBLIC STATEMENT
The Commission may publish a public statement about a party and its findings concerning the party’s non-compliance with regulatory requirements. The criteria to be considered in assessing whether to publish a public statement are listed in section 11C of the Financial Services Commission (Bailiwick of Guernsey) Law, 1987 and, in respect of prescribed businesses, under section 14 of the Prescribed Businesses (Bailiwick of Guernsey) Law, 2008, as amended.
8.      DISQUALIFICATION ORDERS AGAINST AUDITORS AND ACTUARIES
The Commission can issue an order disqualifying a person from acting as an auditor of a licensee or as an actuary of a licensed insurer carrying on long term insurance business. The Commission can also report an auditor or actuary to any authority, institution or professional body that the auditor is subject to where the auditor has failed to comply with its obligations under the Regulatory Laws. The Commission may disclose any information to those bodies with a view to the commencement of or in relation to disciplinary proceedings involving an auditor or actuary.
9.      PROHIBITION ORDER / DISQUALIFICATION ORDER
The Commission can issue an order prohibiting a party from working within the regulated financial industry of the Bailiwick, at particular levels of authority or responsibility and for a specified period of time.  The Commission maintains a list on its website of those individuals against whom a prohibition order has been made.  The Commission can also make an application to the Court for an order that:

  1. An individual be disqualified from acting as a director under the Companies (Guernsey) Law, 2008.

  2. A person be prohibited from being a member of any Guernsey limited liability partnership or a specific Guernsey limited liability partnership. 

  3. A person be prohibited from being a foundation official of any foundation or any specified foundation or from participating in, or being in any way concerned in, directly or indirectly, the management, formation or promotion of any foundation or any specified foundation (although such an application would be with the leave of the Court).

A person who performs or who agrees to perform any function in breach of a prohibition order or disqualification order is guilty of a criminal offence.
10.  DISCRETIONARY FINANCIAL PENALTY
The Commission may impose a discretionary financial penalty of up to a maximum of £200,000. The criteria to be considered in assessing whether to impose a discretionary financial penalty are listed in section 11D of the Financial Services Commission (Bailiwick of Guernsey) Law, 1987 and, in respect of prescribed businesses, under section 13 of the Prescribed Businesses (Bailiwick of Guernsey) Law, 2008, as amended.
 
Discretionary financial penalties are to be distinguished from administrative financial penalties.  Administrative financial penalties automatically apply where a party has contravened a routine requirement such as the filing of annual accounts.  The Commission does not have the discretion to vary or waive administrative financial penalties.
11.  WINDING UP, DISSOLVING AND ADMINISTRATION
 The Commission may make an application to the Court for:

  1. The winding up or administration of a company under the Companies (Guernsey) Law, 2008, as amended, the Companies (Alderney) Law, 1994, as amended or a number of the Regulatory Laws.  The refusal or revocation of a licence or registration is one of the grounds upon which the Commission may make an application to the Court for winding up of a company under a number of the Regulatory Laws.

  2. The winding up or administration of a limited liability partnership under the Limited Liability Partnerships (Guernsey) Law, 2013.

  3. The dissolution of a limited partnership under the Limited Partnerships (Guernsey) Law, 1995, as amended.

12.  OTHER COURT ORDERS
The Commission can apply to the Court for various other orders, in addition to the ones noted above.  These include, but are not limited to, orders to:

  1. restrain unlawful business, to prevent a party from engaging in conduct  contrary to a Regulatory Law,

  2. repay monies accepted or paid over in the course of carrying on an unauthorised or unlawful business, which can also include the appointment of a receiver in order to recover those amounts,

  3. sell the shares of a controller or significant shareholder held in contravention of a Regulatory Law,

  4. appoint an administrative manager to direct the affairs, business and property of a licensee for a prescribed period, and

  5. direct that a company change its name, where the name may mislead the public as to its regulatory status.

Criminal Prosecution

The Commission is not a prosecuting authority, and does not have the power to bring criminal charges against a person or to undertake a criminal investigation into an apparent breach of the Regulatory Laws or the Bailiwick’s AML/CFT regime, for which the Commission undertakes supervisory functions.
Should the Commission come across, at any time, a suspected or apparent breach of a Regulatory Law or the Bailiwick’s AML/ CFT regime,  the Commission may refer the matter to HM Procureur (i.e. Attorney General), or may refer the matter directly to the law enforcement agencies – the Guernsey Police or Guernsey Border Agency. A decision whether to commence an investigation and/or bring criminal charges is a matter solely for HM Procureur.
 
The Commission will generally regard a breach of a Regulatory Law or the Bailiwick’s AML/ CFT regime as sufficiently serious if and to the extent that it poses a threat to clients or potential clients or to the reputation of the Bailiwick and/or where it casts doubt on the integrity, competence or financial standing of the person concerned. It will also be relevant if the breach was deliberate or premeditated rather than accidental, or if the party has failed to report the matter giving rise to the breach to the Commission.
 
Failure, inability or refusal to cooperate with the Commission to rectify a breach, and a history of past breaches or poor regulatory compliance (which may give grounds to believe that the breach is likely to be repeated and/or is part of a systemic failure) will also be taken into account. These factors are not exhaustive, but are intended to indicate the types of matters that may be referred for consideration by HM Procureur.  Ultimately, cases that may be referred will be assessed by the Commission on their merits on a case-by-case basis, and referral will not necessarily be made on every occasion.

Right To Appeal

The right to appeal against a decision of the Commission to impose an enforcement measure is prescribed in the Regulatory Laws listed above.

Disclaimer

This article has been prepared for information purposes and does not constitute legal advice. The Commission does not accept any legal liability for any action that may be taken in response or as a result of the information contained in this article.