The Jersey Financial Services Commission (the 'JFSC') has recently introduced Codes of Practice for Certified Funds (the 'Codes') which enhance the framework for the regulation of funds under the Collective Investment Funds (Jersey) Law 1988 (the 'Law').

The Codes were introduced under Article 15 of the Law, and apply to all unclassified funds issued with a certificate under Article 8(B) of the Law ('Certified Funds'). This includes any fund structured as an openended unclassified collective investment fund offered to the general public (an 'OCIF'), an Expert Fund and a Listed Fund (in each case, established pursuant to the applicable guide issued by the JFSC) and also includes closed ended funds offered to the public, but excludes any non-Jersey fund; recognized fund (i.e. retail funds offered in the UK); unregulated fund; and private fund.

The Codes have been introduced by the JFSC for the stated purpose (in line with the statutory requirements) of establishing sound principles and providing practical guidance in respect of any Certified Fund and any provision of the Law or any regulations or orders made under the Law. They have been introduced following a detailed liaison with industry, which originally began in 2006, and commenced in earnest in 2009.

The JFSC takes the view that the Codes do not impose any significant material change to the regulation of Certified Funds. Rather, the Codes rationalise the process of licensing and regulating funds, and the JFSC's practice of including standard conditions on the issue of a fund certificate is now replaced by the obligation of a fund to comply with the applicable provisions set out in the Codes. This decriminalises any breach of the obligation (a breach of a certificate condition is a criminal offence, whereas a breach of the Codes is not).

The Codes also reflect evolving international standards, such as those promulgated by the IMF and IOSCO, and have been implemented with an eye towards the AIFMD requirements relating to third country equivalence – once the equivalence regime is finalised, the intention is that the Codes will be appropriately updated to ensure compliance.


The Codes set out eight fundamental principles governing the standards of conduct expected of Certified Funds. In addition, the Codes set out detailed standards of conduct.

The fundamental principles are that a Certified Fund must:

  • conduct its business with integrity.
  • act in the best interests of unitholders.
  • organise and control its affairs effectively for the proper performance of its business activities and be able to demonstrate the existence of adequate risk management systems.
  • be transparent in its business arrangements with unitholders.
  • maintain and be able to demonstrate the existence of both adequate financial resources and adequate insurance.
  • deal with the JFSC and other authorities in Jersey in an open and co-operative manner.
  • not make statements that are misleading, false or deceptive.
  • at all times comply with and be operated in accordance with any applicable guide.


It is the responsibility of the Certified Fund, operating through its certificate holder, to comply with the Codes, and to implement any additional practices it considers necessary for the proper management and control of its business. For a company, the responsibility lies with the company itself; for a limited partnership, with the general partner and for a trust, with the trustee.

Without changing the ultimate responsibility for compliance with the Codes, the functions of a Certified Fund may be delegated in accordance with the JFSC's Policy Statement and Guidance Note on Outsourcing and Delegation.

A failure by a Certified Fund to follow the Codes represents grounds for the JFSC to take enforcement action which may include, for example, the removal of individuals from the Certified Fund's management and, in the most serious of cases, may include a direction to wind up the Certified Fund or a revocation of its certificate.

As noted above, a breach of the Codes will not of itself render any person liable to proceedings of any kind. Neither will a breach invalidate any transaction. However, the Codes will be admissible in evidence if relevant to any question in proceedings, and may be applied in the determination of any such question.

In evidencing compliance with the Codes, Certified Funds should now ensure that procedures and systems are in place to manifestly demonstrate compliance.


The Codes came into immediate effect on 2 April 2012, and all Certified Funds are required to comply with the Codes in full.

The JFSC will, however, look favourably on any Fund that is in compliance with the fundamental principles of the Codes and is actively taking steps to secure compliance with the detailed underlying requirements. Additionally, a fund may apply to the JFSC for variance from the Codes, in exceptional circumstances, where strict adherence to them would produce an anomalous result.

There are very limited grandfathering provisions in the Codes. Note, however, that OCIFs established prior to the introduction of the Codes shall be deemed not to be in breach of the Codes as a result of any preexisting variance from the terms of the OCIF Guide (although the JFSC still expects such funds to take necessary steps to comply with the Codes where the cost implications are not significant). There are also certain transitional provisions relating to audits and to departures by existing funds from accounting standards.


All Certified Funds (through their certificate holders) should be benchmarking their current written procedures against the requirements set out in the Codes; ensuring that the correct paper trail exists; and – moreover – ensuring that appropriate corporate governance is established (the point of failure considered by the JFSC to be the most likely).

Amongst the many items to consider and/ or review are the new requirements to explicitly consider relating to insurance and to appropriate continuing professional development. Procedures manuals and associated documentation should now include a complaints handling system and procedure. Stationary should include reference to the fact that the fund is regulated by the JFSC.

Please note that many of the terms used in this briefing note have particular legal significance, not detailed in full herein. Please refer to our guide entitled 'Jersey Funds Overview' for additional information regarding Jersey funds generally.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.