‘Important milestone’ as UK amends law which addresses delays to Gib market access regime

The Gibraltar Authorisation Regime (GAR) is about 18 months away from introduction as amendments to UK law are set to address delays, the Minister for Justice, Trade, and Industry Nigel Feetham told Parliament.

In exchanges in Parliament Mr Feetham highlighted proposals he said would meet concerns raised by regulators relating to the insurance sector, adding that after recent gaming tax changes Gibraltar is “not in a position to take a double hit of any nature”.

The GAR makes way for permanent market access arrangements between the UK and Gibraltar financial services firms, something which is not available to any other Overseas Territory, Crown Dependency or third country.

The UK Financial Services Bill contains amendments which will remove the current statutory requirement for HM Treasury to undertake sector-by-sector assessments prior to commencement of the regime, Parliament was told.

In answer to parliamentary questions from the shadow minister for finance Roy Clinton, Mr Feetham said this should help address the delays experienced since the enactment of the Financial Services Act 2021.

According to Mr Feetham, HM Treasury completed its initial assessment of Gibraltar's cross-sector legislative framework last year, with a positive outcome.

“Subject to the passage of the Bill in the UK, these amendments should provide greater certainty and enable the Gibraltar Authorisation Regime to be brought into effect more quickly than would otherwise have been the case,” he said.

He said this is “an important milestone in our financial services relationship” with the UK.

In parallel, work continues on the preparation of Memoranda of Understanding between the respective regulators, together with the secondary legislation required in both jurisdictions to ensure a smooth transition to the new framework.

Mr Feetham added that the UK Government has reiterated its support and has recognised the importance to Gibraltar's economy and its insurance sector of continued access to UK financial services markets.

He said the Government has received confirmation from HM Treasury that UK officials will continue working closely with Gibraltar officials and with the respective regulators to facilitate implementation of the regime.

The detailed supervisory arrangements which will underpin the regime are matters for the independent regulators, Mr Feetham said.

“The Gibraltar Financial Services Commission is engaging constructively with its UK counterparts, principally the Prudential Regulation Authority, on the framework for supervisory cooperation necessary to support implementation of the GAR,” he said, adding he receives regular updates on progress.

“Madam Speaker, the Government remains committed to the successful implementation of the Gibraltar Authorisation Regime and will continue to work closely with all relevant stakeholders with a view to bringing this important initiative to a successful conclusion.”

Mr Feetham added the UK Government, through the Treasury, had given him a categorical commitment that they stand behind Gibraltar.

“Secondly, that they also understand the sensitivities for our economy, Madam Speaker, in terms of anything that is done in the UK that might impact on Gibraltar, indeed our tax revenues.”

Mr Feetham described how “very strong representations” had been made on the back of similar representations related to changes in the UK gaming tax.

“We have made the point emphatically that Gibraltar is not in a position to take a double hit of any nature,” he said.

“They have reassured me that that is not the intention of the Government of the UK, but to the extent that there are conversations that need to take place between regulators as independent regulators with regards to the mitigation of risk, those are discussions which the UK Government cannot interfere in.”

He added that the nature of the conversations is that what is being put forward by the Gibraltar regulator “more than amply mitigates any particular concern.”

Mr Feetham said that the economic impact for the Gibraltar Government “could be significant” even though it relates to a “very specific narrow area”.

“There are proposals that have been put forward that, in my opinion, Madam Speaker, will meet any concerns that have been raised by independent regulators,” he said.

He added that one company name, Enterprise Insurance, has continuously been mentioned in conversations.

Enterprise Insurance was licenced and regulated in Gibraltar by the Financial Services Commission and went into an insolvent process, which has cost the UK Financial Services Compensation Scheme in excess of £200 million.

“Just one failure in Gibraltar, Madam Speaker, has cost the relevant bodies in the UK in excess of £200 million,” he said.

“I understand the legitimate concern, I do understand, but I believe we can address those concerns...with a view to bringing this important initiative to a successful conclusion.”

Mr Feethm added that the “impact of not getting to a successful conclusion could potentially be significant.”