The Gibraltar Financial Services Commission has signed a Regulatory Settlement Agreement with the STM Group of wealth management companies in Gibraltar. The agreement relates to the period between 1 January 2016 and 31 December 2017, during which time standards in some areas dropped.

The STM Group of companies consists of the following Gibraltarian companies, all of which are regulated by the GFSC. They are known collectively “STM Fidecs, Gibraltar.”

• STM Life Assurance PCC PLC (STM Life);
• STM Fidecs Management Limited (FML);
• STM Fidecs Pension Trustees Limited (FPT);
• STM Fidecs Life, Health and Pensions Limited (FLHP) and n STM Fidecs Trust Company Limited (FTCL).

The regulator called the accountancy firm of Deloitte in to inspect STM as a so-called 'skilled person,' in the same manner as in the United Kingdom. Deloitte produced a report on 8 June 2018 which contained plenty of suggestions for reform at the STM Group and STM Fidecs, Gibraltar have been working towards their completion ever since. STM has now fully 'remediated' (completed) 32 of Deloitte's actions and recommendations, improving policies and procedures throughout the group. It has had to pay a monetary penalty but the figure is a secret.

A regulatory result

The gist of the reforms seems to be, in the regulator's words, "ensuring that conflicts of interests and risks to independence are identified, recorded and appropriately managed." The group has also accepted the regulator's assertion that for a limited time it operated some AML/KYC policies in the relevant period that differed between its companies - a sin in the eyes of the regulator. STM Life accepts that its compliance, internal audit and risk management functions also fell below the standard that the GFSC expected of it.

STM Fidecs, Gibraltar, have collectively acceded to the GFSC's wishes to pay a financial penalty in accordance with the Supervisory Bodies (Powers etc) Regulations 2017.

The companies’ regulatory status remains unchanged and the GFSC has vowed to take no further action.

Cagey company, cagey commission

On a trading update on its website, STM Group has written a terse note: "We are pleased to confirm that agreement had been reached between the STM Group of companies within Gibraltar (the Companies) and the Gibraltar Financial Services Commission (GFSC) following the Deloitte Report. All actions and remediation have been completed to the satisfaction of the GFSC, the companies' status as regulated firms remain unchanged and no further action is contemplated."

STM moved its headquarters out of Gibraltar in 2018, as can be seen here. The precise connection between the arrest of CEO Alan Kentish - who has been completely exonerated - and the regulatory remediation is unknown, except to say that AML deficiencies had come to the fore. A spokesperson for the GFSC declined to comment.