Application for leave to appeal granted to GFSC

In our recent article (available here) we considered the findings of LB Marshall KC in Domaille, Clarke & Hannis (together the 'Respondents') and the Guernsey Financial Services Commission (the 'Royal Court Judgment'). In the Royal Court Judgment, LB Marshall KC allowed an appeal brought by the Respondents against sanctions imposed upon them by a Senior Decision Maker (“SDM”) appointed by the Guernsey Financial Services Commission ('GFSC').

The GFSC was initially refused leave to appeal against the Royal Court Judgment (with LB Marshall KC holding that none of the grounds of law was sufficiently arguable and that the case did not disclose an issue which ought to go to the Court of Appeal in the public interest). 

The GFSC thereafter successfully renewed its application for leave to appeal to the Court of Appeal (the 'Leave Judgment'). A copy of the Leave judgment is available here.

This briefing provides an overview of the key findings of the single judge of the Court of Appeal.

The Leave Judgment

The GFSC obtained leave to appeal on the basis of a series of assertions that LB Marshall KC erred in misapplying Guernsey's anti-money laundering regime; in making findings on probity and prohibition orders and in her approach to the assessment of financial penalties.  The GFSC's contention as to allegations of pre-determination and/or a lack of an open mind were refused.

In reaching its conclusion, the Court made various noteworthy findings including the following:

1. It was arguable that LB Marshall KC gave an over-broad interpretation to the scope of her jurisdiction on an appeal under section 106(3) of the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law 2020 (“the Enforcement Powers Law”) and if that was right then she may thereby have taken upon herself, to an inappropriate extent, an “original and independent authority to appraise and evaluate the materials in the case” so as to treat herself as having an independent fact-finding authority. The Court of Appeal confirmed this is an important question of law in the context of a regulatory regime affecting a large number of licensed bodies in an important sector of the Guernsey economy.
2. There is a public interest in the Court of Appeal making a pronouncement on whether tangible consequences of breaches may, or may not, be relevant to the level of penalty to be applied.
3. The relationship between what falls to be proved for a finding of dishonesty, a finding of lack of probity, and a finding of want of integrity is a difficult and complex one. Accordingly, the submission that the Lieutenant Bailiff wrongly misapplied the relevant two-stage test to decisions as to whether there was a want of integrity as well as situations where there was dishonesty, is arguable, as a matter of law.
4. That is was arguable either way, and a point of general public importance, whether or not a penalty under section 39(2) of the Enforcement Powers Law is concerned with a present breach of current licensing conditions or, alternatively, that imposing such a penalty by reference to past conduct, without having regard to the levels of penalty which were in place at the time when conduct said to breach such licensing conditions took place, amounts to retrospective penalisation and is therefore unlawful and/or unfair.

Walkers' comments

It is clear that the outcome of the GFSC's appeal will be important to all financial services businesses and it is interesting to note that the Court of Appeal remarked that there was 'an important question of law in the context of a regulatory regime affecting a large number of licensed bodies in an important sector of the Guernsey economy'.  

The ultimate judgment in the appeal is likely to provide much needed guidance on what financial services businesses can reasonably expect when the GFSC exercises its powers under any enforcement procedure.