MAXIMUM fines that can be handed to senior figures in Jersey’s finance industry are being slashed – with the highest penalty falling from £400,000 to £250,000.
External Relations Minister Ian Gorst has signed an order reducing the maximum financial penalties that the Jersey Financial Services Commission can impose on individuals connected with regulated businesses.
The changes, which come into force on 1 September, follow a government consultation into the civil financial penalties regime amid concerns that the threat of large fines was putting professionals off taking on senior compliance roles.
The government’s consultation response, published this month, said the “excessive dissuasive effect” on compliance professionals and others considering roles carrying potential personal liability “remains a key concern” across the financial sector.
It warned: “We believe that a penalties regime that is so dissuasive that it deters talented professionals from pursuing careers in financial crime compliance, particularly when the industry is already facing difficulties recruiting experienced practitioners, risks being counterproductive.”
The response added that such a regime could “undermine the effectiveness of the broader financial crime framework”.
Currently, the maximum penalty that can be imposed on an individual depends on the seriousness of the breach, ranging from £10,000 for a Band 1 contravention to £400,000 for the most serious Band 3 breaches.
Under the new rules, the maximum Band 1 penalty for a principal person will halve to £5,000, while the Band 2 maximum will fall from £200,000 to £100,000.
For principal persons, the Band 2A maximum will drop from £300,000 to £150,000, while the highest Band 3 penalty will fall from £400,000 to £250,000.
Key persons and those who perform, or previously performed, senior management functions will no longer face penalties for Bands 1 and 2. Their maximum penalties for Bands 2A and 3 will be £100,000 and £200,000 respectively.
The consultation response said the changes would “achieve a better balance between dissuasion, effectiveness and proportionality”.
It said removing the lower-band penalties for key persons and senior managers should alleviate concerns among compliance professionals, particularly where a breach was not necessarily directly linked to their own actions or omissions.
However, penalties will remain for negligent or reckless conduct, with the government saying this “remains the most effective and dissuasive course of action”.
No penalties have yet been imposed on individuals under the regime.
The government said the revised approach would also recognise differences in responsibility and financial capacity between principal persons, key persons and senior managers, while ensuring boards remained ultimately responsible for matters affecting their businesses.
