Monday, May 21, 2007

BVI FSC Establishes New Penalty Regime for Licensees

After the recent approvement of Telecommunications Liberalisation Policy, the British Virgin Islands Financial Services Commission has implemented a new penalty regime, with the purpose to promote higher standards among licensees. The Commission has commented that penalties are intended to stop those licensees who breached regulatory laws from committing further contravention, and to show the benefits of regulatory compliance.

The Regulations (Administrative Penalties), approved by Executive Council under the Financial Services Commission Act, 2001, came into effect on 15 January 2007. The penalties vary depending on the severity of the contravention, the lowest one being $100 and the highest $20,000.

Before imposing a penalty, the Commission must first give writing notice to a licensee, which should include the contravention on which the Commission proposes to impose the penalty, the amount of the proposed penalty, and the entitlement of the licensee to make representations to the Commission. Then the licensee has 21 days to make factual representations to the Commission, and these are taken into consideration before a penalty is imposed. After the Commission issues a final decision to impose a penalty, the licensee receives a penalty notice setting its amount.

In determining the amount of a penalty, BVI FSC has elaborated the following guidelines: the nature and seriousness of the contravention; whether the licensee has previously contravened the Act or any regulatory legislation; whether the contravention was deliberate, or caused by the negligrence of the licensee; whether any third parties got any loss or damage as a result of this contravention; at last, the ability of the licensee to pay the penalty.

Penalties may be appealed to the Financial Services Appeal Board.

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