Knowledge

This briefing summarises the approach taken by the Royal Court of Guernsey (the "Court") when asked to review enforcement decisions issued by the Guernsey Financial Services Commission (the "GFSC").

Over the past decade, a sequence of statutory appeals has examined findings of regulatory breach, assessments of probity, penalties, prohibition orders, public statements and related enforcement outcomes. The resulting body of judgments sets out how the Court understands its appellate role, the principles it applies when considering the regulator's reasoning, findings on the evidence and questions of proportionality, and the circumstances in which an enforcement decision may be confirmed, varied or remitted.

The discussion that follows draws solely on reported judicial decisions and reflects themes that recur across those cases.

The range of enforcement decisions that come before the Court

Enforcement decisions appealed to the Court span the full spectrum of the GFSC's statutory powers. Challenges have arisen in relation to prohibition orders, financial penalties, public statements, and findings that an individual or entity does not meet the minimum criteria for licensing. In several appeals the Court has also been asked to consider the appropriateness of disapplying fiduciary exemptions or the characterisation of conduct as involving a lack of probity.

These decisions are typically taken by a Senior Decision Maker ("SDM") under the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 (the "Enforcement Powers Law") or other regulatory laws in force at the time of the underlying conduct. Appeals have proceeded on the basis that the SDM's determination is the operative enforcement decision for the purposes of the statutory framework. In some cases ancillary issues have arisen, such as applications for a stay of a penalty or prohibition order pending the outcome of the appeal.

The enforcement landscape therefore presents a varied set of decisions for review, and the relevant statutory powers differ depending on the period in which the conduct occurred. A number of general themes nonetheless emerge.

Categories of challenge advanced in the Court

Procedural fairness
Appellants have alleged procedural irregularities in the handling of representations, the use of material said to be incomplete or inaccurate, delay, or other steps said to affect the fairness of the process. The Court has examined whether any such issue materially affected the decision and whether it can be cured through the appellate process. In practice, the Court has held that the statutory right of appeal equips it to address any procedural deficiency when reviewing the merits.

Bias or the appearance of bias
Structural challenges alleging lack of independence or impartiality of the SDM have been advanced but have not succeeded. The Court has consistently held that the combination of an SDM drawn from an external panel and a full statutory appeal to the Royal Court is sufficient to satisfy Article 6 of the European Convention on Human Rights ("ECHR"). Earlier attempts to frame objective-bias arguments through judicial review did not result in the decisions being set aside.

Reasoning and evidential sufficiency
A recurrent ground concerns whether findings are properly supported by the evidence and whether the SDM has sufficiently explained the basis for conclusions, particularly where serious allegations, such as want of probity, are made. The Court has intervened where reasoning has been incomplete or where evidential inferences were not adequately justified.

Proportionality and penalty
The Court has considered challenges to the proportionality of penalties, prohibition periods, and public statements. These challenges require the Court to assess whether the outcome falls within the regulator's permissible evaluative range and whether the balance struck was a reasonable one. In some appeals sanctions have been reduced or set aside. In others the Court has confirmed that the SDM's recommended sanctions were proportionate.

Legal error or statutory interpretation
The Court has addressed whether the SDM applied the correct statutory tests, relied on provisions not properly engaged on the facts, or misapplied regulatory criteria. Appeals have succeeded where there was a misapplication of statutory powers or where a finding was made under an incorrect legislative regime.

Implementation and interim relief
Interim applications seeking a stay of enforcement have required the Court to assess whether implementation of a sanction before determination of the appeal would give rise to prejudice that could not be remedied. Stays have been granted in part, reflecting the nature of the sanction and the grounds of appeal.

The Court's role and intensity of review

The Royal Court has described its appellate jurisdiction as one that permits review of both legal and factual matters capable of affecting the validity of the enforcement decision. Earlier authorities characterised the right of appeal as conferring "full jurisdiction" in the ECHR Article 6 sense, enabling the Court to consider any matter raised by an appellant and, where appropriate, to remit the case with directions. Later authority has emphasised that the appeal is not a rehearing de novo. The Court does not step into the shoes of the regulator or replicate the SDM's evaluative task: it examines whether the decision is affected by error under the statutory grounds for appeal.

In exercising this jurisdiction, the Court has been clear that the GFSC is a specialist regulator. While the Court is empowered to review findings of fact, law and discretion, it avoids substituting its own regulatory evaluation where the SDM's conclusions fall within the range of responses available to a decision-maker acting within the statutory framework. The Court has also recognised the counter-factual difficulty of revisiting a complex supervisory assessment after the event, and its role focuses on whether the SDM's reasoning was sound on the material available at the time.

Proportionality and the assessment of sanctions

Proportionality has featured prominently in appeals concerning prohibition orders, penalties and public statements. The Court has adopted an approach anchored in whether the SDM has achieved a fair balance. It considers whether material factors have been accorded disproportionate weight or whether the sanction exceeds the reasonable range of responses available on the findings upheld. Deterrence and the statutory objectives in the enforcement laws form part of the context in which that assessment occurs.

Intervention has followed where the Court identified legal or evidential flaws that undermined the basis for the sanction. Where underlying findings were set aside, sanctions have been quashed or remitted. Conversely, where the findings remained intact and the SDM's evaluative reasoning was rational and adequately explained, the Court has upheld the sanctions even if other plausible outcomes could also have been reached.

The Court also distinguishes between sanctions primarily dependent on evaluative judgment and those driven by discrete findings, such as probity. In cases where a particular finding materially informs sanction but cannot be sustained, the matter has been remitted to the GFSC for re-determination.

Procedural themes

Breadth of statutory grounds
The statutory appeal provisions enable appellants to raise legal, factual and procedural challenges. The Court has consistently applied these broadly framed rights of appeal to address alleged deficiencies in the SDM's decision-making process.

Article 6 considerations
The Court has held that the enforcement structure is compatible with Article 6 ECHR because any defect at the SDM stage can be addressed on appeal. The possibility of remission with directions ensures that the enforcement outcome can be made compliant with Convention standards.

Hindsight and contemporaneous context
When reviewing findings, the Court evaluates them by reference to the material before the SDM and the statutory framework in place at the time. It avoids relying on information or perspectives that arose later and focuses on whether the decision was adequately reasoned on a contemporaneous basis.

Implementation and timing
The Court has addressed whether sanctions should take effect before an appeal is determined. In assessing applications for interim relief, it has balanced the statutory functions of the regulator with the potential irreversible consequences for appellants.

Present position

After a period of relatively active appellate litigation, the position on appeals appears settled. The Royal Court continues to treat statutory appeals under the Enforcement Powers Law and predecessor legislation as providing a comprehensive framework for reviewing enforcement decisions, including the ability to examine factual, legal and procedural questions and to remit matters where appropriate. The Court of Appeal has confirmed that this process is not a rehearing but a structured review that allows the Court to assess whether the SDM's findings and sanctions fall within the permissible statutory boundaries.

Recent appeals have clarified the Court's approach to reasoning, evidential sufficiency, proportionality and the interaction between probity findings and sanction. They also underline the importance of evaluating decisions within their contemporaneous regulatory context. Where specific findings cannot be sustained, the Court has remitted the matter for reconsideration, but where the SDM's conclusions remain adequately supported, the enforcement outcome has been upheld.

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