JERSEY Post has avoided a fine after the Jersey Financial Service Commission said there were a number of “serious” regulatory breaches involving its bureaux de change services, money transfer, agency banking and cheque encashment services over a four-year period.
In a statement, the JFSC said between January 2019 and December 2022, the board of JPL was “unable to demonstrate adequate knowledge of the regulatory requirements” and “over-relied” on its compliance function to ensure everything was compliant – despite that function “not operating effectively”.
The statement added that this left JPL “vulnerable to significant financial crime risk” which posed a “material risk” to the JFSC’s principles.
Jersey Post chief executive Mark Siviter admitted that the company’s compliance fell “below the required standard” and said he “regrets” what occurred, but it now has an entirely new board and had made “significant changes”. He said there was “no suggestion” that customers suffered any losses as a result of the breaches.
Along with Andium Homes and Jersey Development Company, Jersey Post is a States-controlled entity, meaning the Government of Jersey is a majority shareholder.
In 2022, JPL reported a £6.6 million loss and narrowed that to a loss before tax of £101,000 last year.
The JFSC said JPL warranted a Band 2A civil financial penalty – which is a maximum 6% of average annual turnover – but the JFSC determined it “reasonable and proportionate” to impose a “zero penalty”.
The JFSC’s investigation found that Jersey Post’s previous board felt the money activities conducted at post office branches, which involved less than £370 on average and formed only a small part of the combined business’s overall turnover, to be “low risk” and therefore did not require detailed board-level oversight.
The board’s risk management documentation was also found to be inadequate, containing out-of-date information, according to the JFSC, and there were no detailed written policies or procedures to demonstrate how regulatory obligations should be complied with. Processes around compliance reporting, training of employees and suspicious activity reporting were also found to be lacking.
In deciding on a sanction, the JFSC noted that there was a new board of directors, and that Jersey Post had conducted training of staff and board members since the investigation, ceased providing agency banking and money transfer services, and undertaken a full evaluation of its future financial services offering.
Kerry Petulla, executive director of Enforcement, Intelligence and Financial Crime of the JFSC said: “Notwithstanding the regulatory activities were only a small part of JPL’s business, during the relevant period, JPL is considered to have operated ineffectively in discharging its regulatory responsibilities contravening the regulatory requirements, making it liable to a civil financial penalty.”
She noted that Article 21B(3)(e) of the Commission Law requires the JFSC to consider the “potential financial consequences” to JPL as well as customers.
Mrs Petulla continued: “After careful consideration, the JFSC determined it reasonable and proportionate to conclude on a zero penalty.
“All boards of supervised firms should ensure they comply with their legal and regulatory obligations even in circumstances where it forms only a small part of their overall business.”
Mr Siviter said: “JPL historically offered a wide range of financial services products at its Post Office branches. Its compliance with finance industry regulations fell below the required standard for a period of time. There is no suggestion that customers suffered any losses.”
“JPL regrets what occurred, has an entirely new board and has made significant changes to its product offering, and its compliance procedures,” he continued.
“With these enhancements, JPL is able to continue providing its remaining regulated service, bureau de change, which is a much needed service for Islanders.”
