David John Merrien v Cees Schrauwers (Chairman of the Guernsey Financial Services Commission) (2016) Royal Court Guernsey Judgment 23/2016

Summary

This is a Royal Court of Guernsey judgment (9 June 2016) deciding an appeal by David Merrien against the Guernsey Financial Services Commission. It concerns a December 2013 website notice stating Merrien was not licensed to carry out controlled investment business or long term insurance business, and a December 2014 Final Notice imposing prohibition orders, disapplication of a fiduciary licensing exemption, a public statement, and a 200,000 pound financial penalty following findings that he was not a fit and proper person and had, among other things, mismanaged client investment advice and diverted client payments.

• Outcome on penalty: The Court allowed the appeal solely in relation to the 200,000 pound financial penalty, finding it disproportionate, and remitted the question of the appropriate penalty amount back to the GFSC for a fresh decision.
• Outcome on public statement: Because the published statement referenced the penalty being set aside, the Court held it must eventually be corrected or removed, but stayed this effect until conclusion of a related criminal trial against the Appellant.
• Outcome on prohibition orders: All other grounds of appeal, including challenges to the prohibition orders under the POI Law, Banking Supervision Law, Fiduciaries Law, Insurance Business Law and IMII Law, and the disapplication of the section 3(1)(g) Fiduciaries Law exemption, were dismissed and those decisions confirmed.
• Guidance to GFSC on remittal: In redetermining the penalty, the GFSC must respect the statutory cap, take into account only the factors listed in section 11D(2) of the FSC Law, and give proper regard to the Appellant's financial circumstances and ability to pay within a reasonable period.

This is a case report rather than a rule or notice of general application; it does not itself create new ongoing compliance obligations for regulated entities generally, but illustrates the GFSC's enforcement powers (prohibition orders, public statements, financial penalties) under the FSC Law and related sectoral laws, and constrains how the GFSC must exercise its penalty-setting discretion on remittal in this specific case.

Key obligations

• On remittal, the GFSC must redetermine Mr Merrien's financial penalty within the statutory cap and by reference only to the factors set out in section 11D(2) of the FSC Law, including his ability to pay within a reasonable period.
• The GFSC must, in due course (stayed until conclusion of the related criminal trial), modify or remove its public statement about Mr Merrien to the extent it references the now-set-aside 200,000 pound penalty.

Applies to

insurance intermediaries, insurance managers, controlled investment business licensees, fiduciary licensees, deposit-taking institutions, Authorised Insurance Representatives

Deadlines

• until the conclusion of the criminal trial against the Appellant: Stay on the requirement to remove or amend the GFSC's public statement about Mr Merrien