Enforcement

The FSC takes a proactive approach to ensure that unauthorised or fraudulent activity does not take place and to this end employs a dedicated Manager, Enforcement.

The FSC investigates all cases of possible unlicensed activity with a particular emphasis on the prevention of fraud. Intelligence on such activities is gathered from complaints from individuals or institutions and from information passed to it from overseas regulators and other agencies.

The Internet, news and other sources are also monitored to enable the FSC to detect and disrupt possible illegal activities in relation to financial services at the earliest opportunity.

Locally the FSC co-operates closely with law enforcement agencies in the prevention and detection of fraud and other economic crime.

The FSC strongly recommends that prior to entering into any financial agreements with a Gibraltar-registered company, or one that holds itself out as operating in or from within Gibraltar, you should consult the list of licences on its website or contact our staff on telephone number +350 200 40283 or info@fsc.gi.

If you believe that you are dealing with a company or individual that appears to be carrying on financial services business without a licence, please contact the FSC without delay.

FSC's Enforcement Policy

The FSC takes a risk-based approach in selecting which cases to pursue: this includes considering its Statutory and Regulatory Objectives and the Principles of Good Regulation. It considers carefully what course of action would be a proportionate response, exercise a common standard of fairness in the use of its powers and acts in a manner consistent with individual human rights.

The FSC's use of its enforcement powers to ensure compliance with the requirements of the Acts plays an important role in the pursuit of its regulatory objectives. For example:

  1. in relation to the market confidence objective, the FSC's powers to request the Attorney General to bring criminal prosecutions for insider dealing and misleading statements and practices offences, and to impose financial penalties for market abuse, help to maintain confidence in the financial system;
  2. in relation to the public awareness objective, the imposition of disciplinary measures shows that regulatory standards are being upheld;
  3. in relation to the protection of consumers' objective, the imposition of disciplinary measures helps to deter future contraventions, ensures high standards of regulatory conduct and protects consumers; in addition, the FSC's powers to impose conditions or directions may be used to require a firm to take urgent remedial action to protect the interests of consumers; and
  4. in relation to the reduction of financial crime objective, the FSC's use of its powers under the Market Abuse Act helps to reduce financial crime; for example the detection of insider dealing acts as a deterrent.

Taking enforcement action

In determining whether to take action in respect of conduct appearing to the FSC to be a breach, the FSC will consider the full circumstances of each case.

A number of factors may be relevant for this purpose. The following list is not exhaustive: not all of these factors may be relevant in a particular case, and there may be other factors that are relevant.

  1. Where the FSC is directly required to do so by statute
  2. The nature and seriousness of the suspected breach
    • whether the breach was deliberate or reckless;
    • the duration and frequency of the breach (including, in relation to a firm, whether the breach was identified by those exercising significant influence functions in the firm);
    • the amount of any benefit gained or loss avoided as a result of the breach;
    • whether the breach reveals serious or systemic weaknesses of the management systems or internal controls relating to all or part of a firm's business;
    • the impact of the breach on the orderliness of financial markets, including whether public confidence in those markets has been damaged or the reputation of Gibraltar has been harmed
    • the loss or risk of loss caused to consumers or other market users;
    • the nature and extent of any financial crime facilitated, occasioned or otherwise attributable to the breach; and
    • whether there are a number of smaller issues, which individually may not justify disciplinary action, but which do so when taken collectively.
  3. The conduct of the firm or the approved person after the breach
    • how quickly, effectively and completely the licensed firm brought the breach to the attentions of the FSC or another relevant regulatory authority;
    • the degree of co-operation the licensed firm showed during the investigation of the breach;
    • any remedial steps the licensed firm has taken since the breach was identified, including: identifying whether consumers have suffered loss and compensating them; taking disciplinary action against staff involved (where appropriate); addressing any systemic failures; and taking action designed to ensure that similar problems do not arise in future; and
    • the likelihood that the same type of contravention (whether on the part of the firm or approved person concerned or others) will recur if no disciplinary action is taken.
    • the impact upon the business of the licensed firm resulting from the FSC taking action, including its proportionality to severity of the breach. However the FSC will place the interests of the public above those of the firm
  4. The previous regulatory record of the licensed firm
    • whether the FSC (or any other regulator) has taken any previous disciplinary action resulting in adverse findings against the firm or approved person;
    • whether the firm or approved person has previously given any undertakings to the FSC (or any other regulator) not to do a particular act or engage in particular behaviour;
    • whether the FSC (or any other regulator) has previously taken action in respect of a firm, or has previously requested the firm to take remedial action, and the extent to which such action has been taken; and
    • the general compliance history of the firm or approved person, such as previous warnings
  5. Guidance given by the FSC

    6. The FSC will take into account whether any guidance has been issued relating to the behaviour in question and if so the extent to which the firm has sought to follow that guidance.
  6. Action taken by the FSC in previous similar cases
    The FSC will take account of action which it has taken previously in cases where the breach has been the same or similar.
  7. Action taken by other regulatory authorities
    Where other regulatory authorities propose to take action in respect of the breach which is under consideration by the FSC, or one similar to it, the FSC will consider whether their action would be adequate to address the FSC's concerns, or whether it would be appropriate for the FSC to take its own action
  8. Action taken by criminal authorities
    Where a criminal investigation in under way in Gibraltar the FSC will, except as it is necessary to protect consumers, normally await the result of this investigation before taking action itself.
  9. Impact upon clients
    Some action, such as withdrawal of a licence, may have an adverse impact upon clients of the firms The FSC will, however, generally place stopping the spread of abuse to new investors ahead of sorting out the position of existing investors.