The Guernsey Financial Services Commission (GFSC) has said Brexit is partly to blame for its likely decision to raise licence fees by 3% for 2018, breaking a long-held tradition of capping rises at 2%.
This will be seen as something of a disappointment for GFSC director-general William Mason (pictured left) who has held rises to 2% since joining in 2013, a tradition started the previous year in response to widespread criticism from the financial services industry, which argued that such rises were unjustified and seen as punitive.
Mason has presided over a number of cost-cutting exercises that have allowed GFSC to keep its increases down to 2%. These have taken the form of efficiencies seen as unpopular but deemed necessary, such as closing down the final-salary pension scheme and introducing merit-only pay awards.
Extra workload because of Brexit
But the extra workload brought about because of Brexit has meant that extra income must be produced: “I’m certainly spending a lot of time on the Brexit discussions, we have senior people going backwards and forwards to London a lot more and we’re offering technical support to the States’ Brexit team,” said Mason. “I’d say we are offering at least the equivalent of a full-time senior person.”
The other “senior people” that Mason refers to are GFSC general counsel Philip Nicol-Gent and Dr Andy Sloan, director of financial stability and international policy adviser.
Rise ‘fair and proportionate’
An overall blended rate of increase of 3%, excluding anomalies, is proposed for 2018.
Commission Chairman, Dr Cees Schrauwers, said:
“For five years the Commission has kept the average fee increase at about 2% overall per annum. We have done this while maintaining or enhancing the capabilities we require if the Bailiwick is to continue to be regarded as a first-class jurisdiction for financial services. This year, particularly considering the increase in inflation and our technical work supporting the Bailiwick’s Brexit strategy, we consider a 3% increase is necessary. We remain committed to operating effectively”.
Following the introduction of pensions regulation to the Bailiwick, fees for pensions regulation are set out in the consultation paper for the first time. By adhering to the Commission’s now well established approach to setting fees by basing them on the principle that they should be fair, proportionate and broadly aligned to the costs of regulation, the modest additional resources required will be met by annual fees on those licensees engaged in pension business.
Mrs Gillian Browning, Director of the Fiduciary Supervision, Policy and Innovations Division, explains: “The Commission has worked closely with the States and industry to introduce new supervisory regulations for the pensions sector to enhance consumer protection whilst supporting the international competitiveness of the Bailiwick.”