Controlled Services are now known as "Fiduciary Services".
In order to clarify the services covered by the supervision of these activities (company management and professional trusteeship) the Financial Services Commission (FSC) has felt it appropriate to change the division previously known as "Controlled Activities" to "Fiduciary Services". This term is now used widely in the regulatory world and is also recognised more easily by the general public.
Gibraltar has pioneered in the supervision and regulation of Professional Trusteeship and Company Management service providers (some other jurisdictions are now only just beginning to address the regulation of this sector. See below). Company Management is defined in the Financial Services Ordinance 1989 as providing managerial services for profit or reward in or from Gibraltar, whereby a person is a director for, or a shareholder of, a company, or when the control over the whole or substantial assets of the company is vested in the management firm.
If a licence is granted under the Financial Services Ordinance 1989, it will only cover certain types of business. Potential customers of Gibraltar licensees should enquire about the scope of their licences from the Financial
The current trust and company management sector is made up of a mix of professional accountancy firms, legal firms, firms providing a variety of financial services business, and pure company management practitioners. The sector continues to grow at a steady rate. Based on the annual returns submitted to the Commission, numbers of trusts and companies under management have increased during this financial year in keeping with the trend in past years. This is an important sector in the overall structure of the finance centre and therefore it is paramount that the standards and procedures adhered to by those involved are synonymous with the quality and professionalism associated with the provision of financial services in Gibraltar
The supervision of trust and company management licensees is centred on regular prudential visits conducted by the supervisory team. The visits include an examination of the systems and procedures of licensees and a review of files. "Know your customer" procedures remain one of the elements that are considered crucial in the proper administration of all clients' affairs and are an aspect of close scrutiny during visits. Such procedures are ongoing and not something limited to the original acceptance of new business.
Where shortfalls in required standards have been identified, normally timetables for improvement are set and the institution is revisited. The visits have as a main objective the maintenance of high standards in the operation of trust and company management services in or from within the jurisdiction.
The Commission also pays close attention to the level of financial resources within licensed firms. It is essential that licensees maintain a level of solvency and maintain sufficient liquid financial resources to ensure that the service to clients is not compromised at any time. There are provisions in the existing legislation to create rules on the level of financial resources that a licensee is required to maintain.
Gibraltar is the subject of various international initiatives. Other jurisdictions are affected by these developments and one of the issues being faced is the regulation and control over corporate services and related service providers. This will most likely lead to reputable financial services centres having to consider the regulation and supervision of corporate services providers. Indeed the Channel Islands and the Isle of Man have drafted legislation to cover these activities. This is a welcome first step towards creating a more level international playing field.
The Commission continues with its policy of regulatory co-operation with other supervisory and enforcement bodies where this is warranted and falls within the provisions of the Financial Services Commission Ordinance.