The British government wants to extend watchdog and compensation protections to consumers of Gibraltar’s financial services companies when the Brexit transition ends.
The Treasury has launched a consultation to find out if the market and consumers support setting up a financial ombudsman to deal with complaints and a compensation scheme to safeguard money held on account or in investments.
Both schemes have run successfully in the UK for many years.
“In light of the special and historic relationship between the UK and Gibraltar and reflecting the unique institutional framework that was in place while we were members of the European Union, the government has committed to enabling financial services firms based in Gibraltar to continue to access the UK market,” says the consultation document.
“The government has already introduced temporary arrangements to protect access, which will be in place until the permanent arrangements are delivered. This consultation seeks views on the government’s proposals to introduce a new long-term legislative regime enabling market access for financial services firms based in Gibraltar.
“The consultation invites views on the main features of the proposed Gibraltar Authorisation Regime, including how firms will enter and exit the regime and measures to ensure the protection of UK consumers.
“The new regime is intended to protect financial stability, promote the safety and soundness of firms, protect market integrity and ensure high levels of consumer protection. It is based on aligned standards of financial regulation, authorisation, supervision and enforcement and will be underpinned by bespoke arrangements for information-sharing, transparency and co-operation between regulators.”
The agreement arises from Brexit and Gibraltar’s complicated legal arrangement with the UK and European Union.
Although not belonging to the EU, Britain is responsible for Gibraltar’s external relations as an overseas territory. This status applied EU treaties with the UK to Gibraltar, but Brexit means this status is lost.
The new Gibraltar Authorisation Regime keeps the territory within the UK financial loop and ensures companies based there can still trade in the UK.
“The new framework is intended to deliver certainty for Gibraltar firms and minimise disruption to business. It has been designed to protect financial stability, to promote the safety and soundness of firms, to protect market integrity and to ensure high levels of consumer protection in both jurisdictions,” says the consultation document.