Financial Crime World

Gibraltar’s Financial Regulator Under Scrutiny: Calls for Greater Transparency and Accountability

A recent review has raised concerns over the independence of Gibraltar’s financial regulator, the Gibraltar Financial Services Commission (GFSC), from the government. While the GFSC has been effective in its role, there are measures that can be taken to increase transparency and accountability.

Recommendations for Greater Transparency

  • Hold a regular debate in Parliament on the GFSC’s annual report, allowing for questions and scrutiny of the regulator’s performance.
  • Develop a Memorandum of Understanding (MoU) between the government and the GFSC to clarify the relationship between the two parties.

The MoU would establish conventions for areas such as:

  • Supervisory decisions
  • Authorisation
  • Financial stability

Providing greater clarity and certainty on how the relationship works. The report recommends that the MoU be published to give greater transparency to the public.

Improving Governance Arrangements

  • Consider changing the reporting line of the GFSC within government, potentially moving it from the Minister of Commerce to the Minister of Finance.
  • This could help reinforce the separation of regulation and promotion, and recognize the increasingly broad range of policy issues for which the Commission is responsible.

Balanced Relationship between Board and Executive

  • The review highlights the importance of a balanced relationship between the Board and executive of the GFSC, with the Board providing direction on policy matters while the executive handles day-to-day operational issues.
  • The report notes that the current governance arrangements allow for a range of operational issues to be delegated to the executive, but that the Board should remain involved in key decisions.

Conclusion

The review concludes that while the GFSC has been effective in its role, there is room for improvement in terms of transparency and accountability. By implementing these recommendations, Gibraltar can strengthen its financial regulatory framework and improve investor confidence in the territory’s financial sector.