STM said it welcomed the recommendations of the Skilled Persons review and some measures had already been implemented.

The review was carried out by Deloitte for certain STM Gibraltar-regulated businesses and the Gibraltar Financial Services Commission. STM has offices in Gibraltar, the UK and other jurisdictions.

STM, which recently reported record profits for 2017, hit the headlines last year after group chief executive Alan Kentish was arrested in Gibraltar following allegations related to a tax dispute involving a former client and alleged failure to disclose the proceeds of crime. The arrest was related to the client and not STM, the company said.

The arrest came two years after STM itself filed two Suspicious Activity Reports to the Royal Gibraltar Police during the tax dispute with a client. Mr Kentish was later released without charge and was fully backed by the STM board throughout the saga.

The new Deloitte review, implemented by STM and the Gibraltar regulator, looked at the effectiveness and oversight of the companies' internal compliance functions, corporate governance and controls and made an assessment of any potential conflicts of interest arising across the business.

The review also covered certain areas in relation to the pensions and life assurance business and the “take-on” and monitoring procedures for intermediaries, clients and investments advised by intermediaries.

The report identified 32 issues, including seven highlighted as priority where improvements are required to ensure that the businesses comply with the relevant Gibraltarian legislation and best practice and 21 other findings with recommendations to help improve the governance and compliance framework of the business, said STM. 

The report puts forward a number of recommendations including a more embedded risk framework with better defined risk appetite statements and additional non-executive directors for relevant subsidiary boards.

For the life assurance company an internal audit function has now been put in place.

The report stated that the STM companies in Gibraltar covered by the review should strengthen their Gibraltar Compliance Plan. A plan has been submitted to the GFSC by STM with more detail on how monitoring and oversight will be carried out in future, including a rolling review of intermediaries and clients.

The report also identified that there should be a more robust framework in place for identifying and recording how potential conflicts of interest across the businesses should be dealt with.

STM said it welcomes the recommendations put forward in the Deloitte report and now expects to engage with the GFSC to agree a plan of action.

• Editor's note: Story updated 12.06.18 / 10.50 am to make clear STM's SIPP business is not directly covered by the review which is focused on STM's Gibraltar operations. STM owns UK Sipp provider London & Colonial but this is not affected by the GFSC review. The story has also been amended to make clear that Alan Kentish's arrest was related to the client at the centre of the multi-jurisdiction tax dispute and not STM.