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 sector.
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.