1.1. Chief Minister's statement on the EU referendum
Following the UK vote to leave the EU, the Chief Minister published a statement noting, in summary, that although there is likely to be a period of uncertainty across the UK and Europe, Jersey will maintain strong access to European markets through its broad and robust third country agreements.
The recent advice issued by ESMA that "no significant obstacles" exist to application of AIFMD marketing passport to Guernsey and Jersey mentioned in our briefing earlier this month is welcome news and supports the Chief Minister's confidence in Jersey's ability to weather the effects of this change.
1.2. Credit ratings
Following the result of the Brexit referendum, the UK's credit rating was downgraded by two notches from AAA to AA by Standard & Poor (S&P). Consequently, Jersey's credit rating has been downgraded by one notch from AA to AA-.
In its report, S&P noted that "Jersey's existing relationship with the EU will not be significantly affected by the exit of the UK from the EU" and "the risks to Jersey's financial sector and its fiscal performance are balanced by its still significant economic resilience". Treasury and Resources Minister, Senator Alan Maclean, said: "This is the best outcome that Jersey could have hoped for following the lowering of the UK's rating by two notches. It reflects our ability to demonstrate that our plans have been based on managing risks to Jersey's economic and fiscal performance". The Chief Minister said "We have been planning for Brexit, we are already outside the EU and we have been successfully developing our economic and international links with countries across the globe. These facts, together with S&P's judgement that Jersey is institutionally strong are reflected in the minimal nature of our downgrade."
2 Jersey Financial Services Commission (JFSC) updates
2.1. Increases to fees
We mentioned in our briefing on 19 January 2016 that Ogier, along with other industry players, had been involved in responding to JFSC consultations on how fees paid by regulated business are calculated and levied. Based on the feedback it received, the JFSC has decided to modify a number of proposals contained within the consultation paper and delay implementation for 12 months. The JFSC agreed to drop the proposed "complex" fee that would have created unwelcome uncertainty for fund managers.
The proposed fee increase of 7% became effective from 1 July 2016 in relation to AIFs, AIFMs, certified fund certificate holders, recognised fund permit holders, COBO funds and registered persons.
2.2 Amendments to Codes of Practice
On 18 May 2016, the JFSC published feedback on its Consultation on Amendments to Codes of Practice. These amendments are to:
- ensure that all notification requirements are clear and unambiguous;
- update regulatory requirements on the handling of consumer complaints following the establishment of the Channel Islands Financial Ombudsman; and
- make minor updating and consequential changes.
The amendments will come into force on 1 September 2016. In order to assist regulated entities, 'clean' and 'track change' versions of the Codes of Practice are available on the JFSC website.
2.3 JFSC Consultation No. 3 2016: MiFID II
This Consultation published on 25 April 2016 sought input as to whether Jersey should introduce a MiFID II equivalent regime and set out certain potential benefits and costs of doing so. The introduction of a MiFID II equivalent regime could create an opportunity for Jersey's Investment Businesses to participate in the EU passport for professional investors, so long as Jersey's investment regime is judged as MiFID II equivalent. This Consultation closed on 15 July 2016 and Ogier, in conjunction with the Jersey Funds Association, has been involved in submitting an industry response that considers the potential disadvantages to the funds industry in adopting a MiFID II compliant regime, particularly in the context of the British public vote to leave the EU.
2.4. JFSC change programme – Issue 2
The JFSC issued the second paper in its 'Change Programme' on 15 April 2016. This paper explains how the JFSC is changing the way that it will supervise and interact with firms in the future, and how those changes are likely to affect regulated businesses by simplifying and speeding up their interaction with firms.
2.5. JFSC publishes Crowdfunding FAQs
The JFSC published a set of FAQs in respect of crowdfunding on the 20 May 2016. The FAQs introduce the different types of crowdfunding, explain the current regulatory treatment of crowdfunding in Jersey and discuss the risks of investing in a business through a crowdfunding platform.
The publication of the FAQs comes at the same time as the Financial Conduct Authority call for input on crowdfunding rules, seeking views on both loan-based and investment-based crowdfunding.
2.6. MONEYVAL report published
On 24 May 2016, the Council of Europe's Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism published a report assessing the Island's compliance with the Financial Action Task Force (FATF) standards. The report noted that Jersey has a mature and sophisticated AML regime, as well as an internationally-recognised mechanism to ensure transparency of beneficial ownership information.
2.7. Amended Outsourcing Policy
On 18 July 2016, the JFSC issued a consultation paper seeking input on proposed changes that will amend the scope of the policy regarding outsourced activity, define key terms to remove ambiguity, remove the distinction between delegation and outsourcing in relation to certified funds and fund services businesses, make changes to the core principles to provide clarity and align with international standards, and provide additional guidance including FAQs. A draft of the amended Outsourcing Policy and Guidance Notes is available for review. The Consultation closes on 30 September 2016.
3 Updates to Jersey legislation
3.1. Draft Proceeds of Crime (Miscellaneous Amendments) (Jersey) Regulations 201-
On 4 May 2016, the Chief Minister lodged the Draft Proceeds of Crime (Miscellaneous Amendments (Jersey) Regulations 201-. The draft regulations focus mainly on the implementation of a policy for regulation of virtual currency in Jersey. This reflects the growing importance of Fintech to Jersey, as the technologies being developed have a huge economic potential for the island.
4 Other news
4.1. BVCA template Request for Proposal for Fund Administration services
The British Private Equity & Venture Capital Association (BVCA) has published its template Request for Proposal (RfP) for Fund Administration services. This comes following a consultation with BVCA members who work as specialist administrators in the private equity industry. The resulting template includes a list of questions tailored for managers or prospective managers, which they may consider asking when undertaking an administrator selection exercise. It is anticipated that the template RfP will be of benefit to private equity administrators by providing them with a comprehensive set of relevant questions that might be asked during a selection process.
4.2. JFSC action taken following Panama Papers
On 10 May 2016, the JFSC announced that it had issued a request for information from financial services firms in order to be fully informed on any material connections between Jersey and Mossack Fonseca. So far, only a small number of relevant connections have been found to date, all of which are being examined by the JFSC.
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