In the wake of constant threats of imminent financial scams and scandals, the implementation of an effective enforcement program is increasingly an ongoing challenge for regulators around the world. Whilst, some regulators adopt an enforcement-led approach, which is characterized by the specific allotment of resources to enforcement activities, others are more geared towards work done in ‘prevention’ rather than ex-post enforcement actions.
As the integrated regulator for the financial services sector, the GLOFSA’s regulatory objectives are as follows:
- Protecting consumers;
- Maintaining confidence in the financial system;
- Financial stability;
- Reducing financial crime.
In delivering its regulatory objectives, GLOFSA champions a prevention model as it seeks to prevent and/or identify problematic issues early in the regulatory process.
The Prevention Model
- Frequent review processes;
- Periodic and exceptional reporting requirements;
- On-site inspections, with greater emphasis on supervision;
- Adopting a stringent licensing framework.
As a risk based regulator, throughout its work, the GLOFSA prioritizes its resources in the areas which pose the biggest threat to its regulatory objectives. Enforcement is one of a number of regulatory tools available to the GLOFSA as part of its preventive approach. The GLOFSA’s approach to the use of its enforcement powers plays an important role in the pursuit of its regulatory objectives.
Principles:
- The effectiveness of the regulatory regime depends to a significant extent on maintaining an open and co-operative relationship between the GLOFSA and those it regulates.
- The GLOFSA exercises its enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with its publicly stated policies.
- The GLOFSA ensures a fair treatment when exercising its enforcement powers.
- The GLOFSA aims to change the behavior of the person who is the subject of its action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.
