The Jersey Financial Services Commission (JFSC), the body
responsible for the regulation of the finance industry in Jersey,
issued a consultation paper in April 2011 with a view to
clarifying, aligning and augmenting the requirements of the seven
sets of Codes of Practice issued under the relevant finance
industry legislation in Jersey.
At present, each code covers one of the following activities to
the extent carried on, in or from within Jersey: Deposit-taking
Business, Fund Services Business, General Insurance Mediation
Business, Investment Business, Insurance Business, Money Service
Business and Trust Company Business. The consultation paper is
proposing amendments to all seven sets of codes.
Proposed amendments broadly fall into three categories; those
provide clarification on the scope and basis on which the codes
align regulatory requirements across the codes wherever
possible, recognising that differing requirements will be required
to reflect specific characteristics of financial sectors
augment existing requirements or set new requirements that are
particular to a financial sector.
The JFSC has stated its view that although the amendments may
appear extensive, overall the amendments are not controversial or
contentious and their implementation by the finance industry should
not be costly.
The proposed changes to the codes include general changes across
all seven codes, in particular changes relating to requirements
concerning corporate governance: span of control, compliance
function and continuing professional development, complaints,
record keeping, financial resources, professional indemnity
insurance and principle 6 notifications. Sector specific changes
will apply in addition to the general changes.
Equally importantly, the consultation paper recognises that many
registered persons carry on more than one type of financial
services business in a single vehicle and are therefore required to
consider more than one code. The consultation paper also recognises
that the JFSC invests heavily in maintaining the current suite of
seven codes such that the regulatory requirements established by
the codes are not in conflict, as far as is possible, where they
set requirements which operate on the entire registered person
rather than being financial service or product specific.
Although differences exist in the content of the codes due to
differences in the finance activities which they seek to regulate,
as part of the process of preparing the consultation paper the JFSC
has identified certain similarities as well as differences between
the codes and is currently considering the feasibility of producing
a single set of consolidated codes. A single set of consolidated
codes would be practical and user friendly, and comprise a
practical solution to some of the issues alluded to above.
The JFSC's thinking appears to be that the consolidated
codes could follow a similar structure to the current codes -
enforceable requirements in the form of high level principles
supported by detailed rules - except that there would be general
regulatory requirements, applicable to all registered persons,
augmented by sector specific regulatory requirements as
The JFSC has stated that it is not looking to set rules covering
all scenarios (a so-called "rules-based approach") and
would continue to vary regulatory requirements where strict
adherence to the Codes of Practice would produce anomalous results
for a particular registered person. What the JFSC appears to be
proposing to do is clarify, align and augment; all words which have
the ability to simplify, which is always welcome in the finance
industry. The consultation paper is currently open for comment and
can be viewed at www.jfsc.org.
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.
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