Legislative Reform Programme (“LRP”)
This page provides information on how you and your firm may be affected by the Legislative Reform Programme (LRP).
The GFSC will update this webpage on a regular basis. Please subscribe to the GFSC RSS feeds for the latest LRP information.
For any enquiries, please email LRP@gfsc.gi
Update: HMGoG and the GFSC held LRP industry sessions during the last week of June. These were delivered to industry sectors and provided an overview of the LRP and key changes introduced.
Please note that slides delivered in these sessions will be available shortly.
What is LRP?
HM Government of Gibraltar (HMGoG) published the Financial Services Bill in the Gazette on 30 May 2019, the key part of the Legislative Reform Programme (LRP). The GFSC provided expert advice to HMGoG, developing and drafting the Bill following consultation with industry. The Bill provides a legislative framework for all financial services sectors that fall within the GFSC’s supervisory perimeter.
The LRP consolidates and rationalises over 90 financial services legislative instruments into one Act and additional supporting, sector specific regulations. The LRP has concurrently implemented all EU legislation transpositions and local legislative initiatives during the lifetime of the programme.
The LRP, through the new Financial Services Bill, provides a clear, more navigable and accessible legislative framework for financial services that will facilitate innovation.
Please note that the Financial Services Bill is subject to Parliamentary approval, this webpage will be updated as necessary if changes are made to the Bill.
Key features of the LRP
The LRP will bring:
• A harmonised approach to authorisation and obtaining permission to carry on regulated activities
• A Regulated Individuals’ Regime
• A new Decision Making Committee
• Procedural clarity and consistency across the board
• The introduction of a Financial Services Ombudsman
• Harmonised cross-sectoral powers and related processes
What are the key changes?
The Permissions regime allows for the issuance of a permission to carry out specific regulated activities to firms.
This does not affect any regulated activity that firms are currently carrying out as existing licences and services will be mapped across to the permissions and regulated activities. The GFSC will advise firms of the permission and regulated activity granted and this will be reflected on the GFSC regulated entities register.
Once the Financial Services Act is enacted and the permissions come into effect, firms will be grandfathered into the new regime. The GFSC will communicate details of your permission and regulated activities. This information will also be reflected on the GFSC’s registered entities register.
Firms will be given the opportunity to query any discrepancies and advise us whether they are still carrying out the regulated activities.
The Regulated Individuals (RIs) Regime requires certain functions within a firm to be approved prior to being appointed by the GFSC, these are known as regulated individuals. These also include sector specific functions as well as positions within a firm that exercise significant influence over the running of the firm.
Regulated individuals can be appointed on a temporary basis under specific circumstances, e.g. where it would be unreasonable to expect the firm to find a replacement immediately.
A person is only permitted to perform a regulated function, including on a temporary basis, if the individual has been approved by the GFSC.
Schedule 14 and 15 of the Bill set out a list of RIs and Significant Influence positions.
Firms should be familiar with Part 8 of the Bill that sets out the Regulated Individuals Regime and Schedule 14 and 15 that provides a list of the notifiable functions within a firm.
The GFSC will be carrying out an information gathering exercise during July to complete our understanding of what individuals are carrying out regulated individual functions at the firm. This is a one-off exercise and designed to provide the GFSC with the information needed to align current information with requirements under the LRP. For existing firms, we understand that several functions will already have been notified to us, however, the new Act sets out specific functions per industry sector that in addition to the core functions, a firm needs to have in place.
Once we have processed information provided by firms, we may advise firms that individuals may be requested to provide further information. This will only be requested in cases where firms name an individual as providing a RI function that has not previously been notified/approved by the GFSC.
Decision Making Committee
The Decision Making Committee ("DMC") will be an independent statutory Committee of the GFSC that will make certain regulatory decisions.
The DMC will consist of six members including three lawyers and three individuals with significant financial services expertise.
The DMC will make specific regulatory decisions as set out in Section 24 of the Bill. Some examples of these include:
• Decision notices linked to supervisory or sanctioning powers (unless the recipient has agreed to the warning notice in writing)
• ‘Urgent’ notices that impose a supervisory or sanctioning power without having been preceded by a warning notice
• To refuse a Regulated Individual’s approval
*those aspects involve a risk of serious consequence for either the firm or for the interests of Gibraltar.