The Commission’s Enforcement Powers

In enforcement cases, the Commission can seek to impose prohibitions on individuals to prevent them from continuing to work in the industry.  Often, such prohibitions have been time-limited, although the Commission could also issue lifetime prohibitions where the circumstances warranted such an approach.

In a recent enforcement case, however, the sanctions imposed on the respondent by one of the Commission’s Senior Decision Makers, were appealed to the Royal Court^[1].

Having considered the appeal, the Royal Court declared that two of the sanctions, the imposition of a time-limited prohibition and the disapplication of the six-directorships exemption from licensing under the Fiduciaries Law^[2] for a specified period, went beyond the scope of the Commission’s legal powers.  Instead, the Royal Court decided that the Commission should follow a similar approach taken by the UK Financial Conduct Authority and only issue indefinite prohibitions (i.e. “lifetime bans”) and disapply the six-directorships exemption indefinitely.

The Commission always believed that its policy offered a more reasonable and proportionate approach to the imposition of enforcement sanctions.  In each case, the Commission only sought to prohibit people for the minimum period that it thought necessary in all the circumstances.  The Commission was therefore very concerned by the decision of the Royal Court, and decided to lodge an appeal with the Guernsey Court of Appeal, which handed down its Judgment yesterday afternoon ^[3]. [click here to access the Judgment].

In essence, the Court of Appeal struck down the finding of the Royal Court that time-limiting prohibitions and disapplication of the six directorships exemption went beyond the scope of the Commission’s legal powers.  Instead, the Court of Appeal confirmed that the Commission had correctly interpreted the scope of its legal powers.  The Commission can now again tailor prohibitions and disapplication of the six directorships exemption to the individual circumstances of each case, and make orders that are reasonable and proportionate in all the circumstances. 

The Commission will now proceed with the enforcement case involving Y, taking into account the guidance provided by the respective Courts.