Guernsey Regulator Plans Company Fee Hike
Thursday, October 11, 2012
The Guernsey Financial Services Commission (GFSC) has proposed that company
fees will rise from 2013 to meet the rising costs of regulating the financial
In a consultation paper outlining the proposals, the GFSC said that presently
its operations are costing around GBP12m (USD19.2m) a year although measures
are afoot to significantly cut operational costs, based on the recommendations
of a report by Ernst and Young in 2012. It is the Commission's policy to retain
reserves worth at least six months' operational costs, but these are presently
lacking and need rebuilding, the Commission said.
Under changes currently being consulted on by the GFSC, application and annual
fees will generally rise by 2%. However, fees for insurance cells will rise
by GBP580 (41%) for applications and GBP350 (21%) for annual renewal.
The proposal follows the Commission's decision last year to freeze
fee levels. Indeed, the creation of a further intermediate fee band in the fiduciaries
sector had the effect of reducing fees for some licensees during 2012,
the GFSC says.
By hiking fees by 2%, effective from January 1, 2013, the Commission will post
a surplus of GBP84,000 during 2013, against a projected deficit of
GBP306,000 if fees were to be retained at 2012 levels.
In order to deflect possible criticism that the fee hike may render Guernsey
uncompetitive in relation to the other Crown Dependencies, Jersey and the Isle
of Man, the consultation paper states that it is not straightforward to compare
fee structures, given their different structures, funding commitments and expenses.
For example, while fees in Guernsey's banking sector are typically higher than
in Jersey and the Isle of Man, funds are considerably cheaper to set up and maintain
in Guernsey than in Jersey.
The Commission projects that the number of licensed banking institutions in
Guernsey will have fallen by three on January 1, 2013, down from 35 on January
1, 2012. The Commission said however that during the course of the year it had
continued to receive enquiries by prospective new licensees, but that it could
not be certain these would translate into new business for Guernsey. Outside
the banking sector, the Commission has forecast modest growth in all other subsectors, however.