The Financial Services Commission's decision to release both its annual report - coincidentally three months late - and proposals to significantly increase the fees it charges licensees while the Rock’s financial community was focused less on business and more on Christmas cheer seems set to backfire.
With the festive season over - and although the Solvency II directive came into force on New Year's day, so occupying the minds of local insurers - many in Gibraltar's financial services sector turned their attention to the two documents published with little ceremony on the FSC web-site. And were unhappy with both the timing and what they read. Some are particularly critical of the fact that the Commission plans to boost its fee revenues at a time when its accounts reflect that it has a £228,000 surplus and more than £1 million in cash in the bank. Though this surplus is a result of a Government subvention - which has cost the ordinary taxpayer more than £500,000 for the past two years and is expected to continue until the end of 2017 - critics argue that with the surplus and cash available there should be no need of more cash from licensees. They also question payments totalling nearly £350,000 to three financial consultancy firms (two in the UK and one in the US) which the notes to the accounts do not explain. 'Nowhere is there an explanation of what these services were or why they were needed.' said one commentator.
It now seems likely that the discontent will lead to calls within the industry for some 'official' way to show their dissatisfaction - possible along lines similar to those reported to have been mooted by members of the GFIA in response to the Commission's 'thematic review' of the funds industry. These wanted to pass a motion of no confidence in the FSC - a 'nuclear option' narrowly averted by the Association’s chairman Joey Garcia who, instead, wrote a scathing 6-page letter to the Commission’s CEO Samantha Barrass. In his penultimate paragraph Garcia points to 'how unhelpful it is for there to be a public document which paints a picture of a real problem regime and of Directors "who do not understand their responsibilities".'
This is only one of several similar derogatory comments made by the FSC in the thematic review which were criticised by the GFIA chairman. 'As usual, Joey was diplomatic but the long and the short of it is that the FSC remarks could dissuade funds from coming to Gibraltar, and its approach does more harm than good to the jurisdiction's reputation,' a leading member of the GFIA told VOX.
'And surely what's sauce for the goose should be sauce for the gander as well', he added. Pointing to the delay of more than three months in the publication of the annual report, he claimed that licensees who were late in submitting their accounts to the FSC 'by even a few days' were liable to fines. 'Who is fining the Commission? No-one.'