Apr 04 - Chief Minister Addresses Financial Services Sector
Today, the Chief Minister in his capacity as Minister of Finance, accompanied by Albert Isola, Minister with responsibility for Financial Services, gave an address to close to 200 individuals from the financial services sector in Gibraltar Here it is in full:
CHIEF MINISTER’S SPEECH TO THE FINANCIAL SERVICES SECTOR
‘The FSC Funding Review - the response of HM GoG’
In 2011, HM GoG made three significant decisions affecting the Financial Services sector;
a) to invest significantly in the promotion internationally of this sector and to properly resource the Finance Centre Department with specialized Senior Executives
b) to ensure Gibraltar was compliant with its EU and International obligations as a reputable and well-regulated Jurisdiction, and
c) to work in close partnership with you the professionals in all aspects of our products, legislation and of course business development.
As you know, we have seen each of these through, and our resolve remains as strong today as it was then. We would be justified in saying if anything that our commitment has increased, and our response today to the FSC Fee consultation review is certainly good evidence of that.
Our investment in the sector has of course not been limited to these items alone as we have been willing partners in the FSC Strategic Plan 2014-2017 to provide robust regulation, in a more efficient and business friendly environment, always complying with an ever increasing wave of EU-driven regulatory change. We have invested heavily in this over the last years and will continue to do so.
You will also know that we are on course to deliver an entirely new set of Financial Services legislation in the coming 12 months which we believe will make doing business in Gibraltar easier, not just for the firms, but of course for the Regulator too. We will be consulting with you this year on every step of the way so that, together, we will achieve the desired and intended result. We are also working closely with your associations on every Directive in its transposition and I thank you for your support in this important cooperation.
The extent of our financial support for your sector across all the areas I have mentioned is unprecedented. The extent of our consultation and cooperation with you on all matters financial services is also unprecedented. It is a signal of our support for the sector and the importance we attach to its further development, whatever the challenges we may face.
For these reasons, we believe it is critical that we have a Regulator which is well resourced and with the appropriate knowledge and expertise to engage confidently with firms in the further development of our Jurisdiction. Our agility in delivering speed to market and proportionate regulation are key factors in competing with other Jurisdictions. To this end, I welcome the news that the FSC has set up from within its existing resources a Change and Innovation team to encourage new ways of doing good business in this sector.
But of course all this requires funding, at a time when we are with your support, going the extra mile to ensure that in everything we do, we are obtaining real value for money and we are all contributing together, without exception.
I am grateful to you all for engaging with us in this consultation process, whether by responding to the Fee proposals, by attending the excellent sector workshops with the FSC or by making direct representations to Albert. We have taken time and great care in listening to your thoughts and concerns on all of these matters and also to your general satisfaction with the new proposed methodology for charging fees. We have sought to achieve a more fair and balanced method for charging fees, directly linked to the cost of delivering that regulation sector by sector.
As you all know and appreciate, there is a significant cost to regulation, which in a small Jurisdiction like ours, can be challenging to meet. Our regulatory burdens are the same as they are for France, Germany or the United Kingdom. It is for this reason that Government has repeatedly over the years provided financial assistance to the regulator to soften the financial burden on the sector.
I am pleased to report that after significant consideration and discussion, we have agreed not only to continue this support, but we have agreed to extend this financial support by increasing the amount of our support each year and also continuing to provide this support beyond the previous 3 year programme of fee increases that you were consulted on in the December paper. As a result of this we have made serious and significant adjustments to the proposed fees for this year which will include the following reductions;
a) we have significantly reduced and capped passporting fees across all of the sectors as you have requested. There is increasing regulatory time to be spent in this work and it is appropriate that some cost is charged;
b) for Insurance Companies we have removed the Solvency Adjustment fee;
c) for our Banks we have removed the fees for Consumer Credit and Payment Services activity;
d) for our Category 3MIFID firms we have halved the proposed fee;
e) for our AIFM’s we have further reduced the fees and halved the additional fee;
f) for our Funds there will be no cost for the first cell/sub fund which will now be included in the base fee;
g) for our UCITS there will be no change to the fee;
h) for our Insurance Intermediaries, Mortgage Credit Intermediaries, Company Managers and Professional Trustees we have reduced the base fee.
These are some of the changes that we have made as a result of your representations. There is an increased cost to Government of course, and as a consequence of these changes, our financial support for this forthcoming year will increase by some 60% and hit £1Million.
But as I mentioned earlier, our support will also be extended in the number of years of support. The consultation proposed an increase this year and further increase next year of 10%. For many of you, the changes we have made will result in reduced fees, and a significant number of firms already had a reduction in their fees from last year, as a result of the new methodology. Increases for some of you remain significant and I much appreciate the responses we have had which accept and understand these increases in light of the growing regulatory obligations we have and the additional resources provided at the FSC.
We will next year increase fees from this new lower base not by the 10% proposed in the Consultation paper but by a maximum of 4% for each of the next 4 years, and thereafter in line with cost of living increases. This will mean that Government will stay with you in contributing to the costs of our Regulator on a reducing basis for many years to come.
We are partners in ensuring that we have the best possible framework for our sector to succeed. In legislation, in regulation and of course in business development we are on the same page. My Government looks forward to continue to work closely with you on all these areas, as well as taking a longer term view on the challenges and opportunities your sector faces for the benefit of all.
I thank you for your time today.
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