Answering a question during the annual Jersey Financial Services Commission business plan presentation last week, JFSC director general John Harris said that although pensions advice was regulated to some extent under the investment regulations, neither the provision of pensions nor consumer credit was covered in Jersey, unlike in most other jurisdictions, including the UK.
The questioner had referred to the transfer of funds from UK final-salary pensions to Jersey structures that might enable pensioners to use that money for unsuitable or risky sophisticated investments – a problem that has in recent years resulted in high-profile court cases. Last year the commission was prompted to launch a public campaign warning of the dangers of putting life savings into ‘too good to be true’ funds promising unrealistically high rates of return.
During the panel discussion last week Mr Harris said: ‘Some form of pension regulation is needed and I do not think we will need to lobby the government on this. It is not acceptable that people are being advised to take money out of their final-salary pensions. We take fully on board what is being said and we are looking to become more demanding in these two areas.’
A major priority for the regulator this year will be the National Risk Assessment, to be carried out by the States but in which the commission will play a major part.
Outlining the process, director of supervision Jill Britton said that initial data collection from regulated firms would be starting in March, in preparation for a report to be published in summer 2019.
She also highlighted the final stages of the change programme leading to risk-based supervision, as well as an extension of the civil penalties regime to enable fines to be imposed on individual ‘principal persons’, as well as regulated firms.
Mr Harris said that although legislative powers had been in place for two years, no firm had yet been fined.
‘We really are the only regulatory authority that does not have the power to fine individuals and that is not sustainable.
‘It is not about going crazy, but about being a credible, grown-up regulator,’ he said.
Also on the agenda this year is a new registry law, introducing for the first time standardised requirements for the filing of legal ownership, beneficial ownership and accounting records for all legal entities, as well as provisions for setting up a register of directors, in line with updated international standards issued by the OECD Global Forum and the Financial Action Task Force.
JFSC chairman Lord Eatwell said: ‘2018 marks the 20th anniversary of the Jersey law that established the commission. The landscape of international financial regulation has changed radically since 1998. Many of the recent changes have come in the wake of the financial crisis of 2007 and keeping up has been a challenge.
‘Over the next year we will begin to consider whether a simplification and rationalisation of our financial services law may be accomplished without excessive strain on resources and we hope to assemble proposals to be shared at an early stage with government and the industry.
‘There will be new challenges ahead. I am confident we can meet them,’ he added.
