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Jersey Financial Services Commission Business Plan 2015
Business Plan 2015
Welcome
& Introduction
John Harris
Director-General
Jersey Financial
Services Commission’s
Business Plan 2015
Lord Eatwell
Chairman
Current &
emerging challenges
Strategic and major
priorities for 2015
Panel
Discussion
By Lord Eatwell
Senator Philip Ozouf
Assistant Chief Minister With responsibilities including Financial
Services, Digital, Competition & Innovation
John Harris
Director-General
John Everett
Director Funds & Fiduciary
Q&A
Agenda
Introduction
Business Plan 2015
Current & Emerging Trends
Introduction
Jersey’s financial services industry faces a
challenging business environment:
Increased global regulation aimed at
protecting the financial system and regaining
investor confidence
Further consolidation within the trust and
corporate services sector
Adaptation of Jersey’s banking model in
response to UK banking regulation
Key challenge for the JFSC is to create a
regulatory regime that:
Enables firms to innovate and exploit
market opportunities
Ensures that firms behave responsibly
and have effective risk management
procedures – necessary conditions for
the protection of Jersey’s reputation
The JFSC must become a more agile regulator, adapting to changes in markets and in regulatory regimes
Business Plan 2015
Criteria Behind Establishing Priorities
Introduction
1 Facilitating Industry
access to markets,
& other benefits
to Industry
2 Matching
international
standards
3 Meeting
legal & other
requirements
4 Assisting the delivery
of the Commission's
statutory functions
and guiding principles
Business Plan 2015
Change Programme
Introduction
Improved Risk awareness
and management
Better Information Management
(including preparation for Freedom of Information legislation)
Enhanced Authorisation and
Supervision – informed by
Supervisory Review
E-enablement Strategy
Change Programme – Key Aims
An Enhanced People Strategy
Facilitating Industry Access To Markets
Business Plan 2015
Business Plan 2015
Major themes include:
Simplify and consolidate
Less product regulation
More service provider focus
Proportionate regulation
Efficient authorisation
Supervision and enforcement powers over all funds
and their service providers
Funds Regime Review
Facilitating Industry Access to Markets
Business Plan 2015
A series of high level
framework discussion
meetings took place with
key stakeholders at the
end of 2014.
The current focus is on the types of fund categories and
the definitions of “Fund” and “Professional Investor”.
The draft definitions were circulated to the industry JRIG for
review on 17 December, 2014. The JRIG had until 31 January
to respond.
Through January and February the review team have been
working on a response to the JRIG comments, with a meeting
to be scheduled for mid-March.
Funds Regime Review
Facilitating Industry Access to Markets
Business Plan 2015
All about becoming a more
effective regulator.
Why? Because the legal
framework is not enough.
The JFSC must
demonstrate effectiveness
to maintain credibility and
market access.
The review will consider items such as:
A more focussed risk model
Do we collect the right data from firms to assess risks?
Supervisors able to make better judgments
More communication with industry about concerns,
findings, etc
Review also provides opportunities for greater efficiency –
for example, better technology for data collection
not just ‘what’ is collected)
Supervisory Review
Facilitating Industry Access to Markets
Matching International Standards
Business Plan 2015
Business Plan 2015
MONEYVAL
Evaluation visit 17-24 January,
generally went well. Only the
centrepiece of a lengthy
process running to September
2015. (Plenary & publication).
Two month window for
legislative and administrative
rectification measures runs
to 23 March, 2015
Issues for the jurisdiction identified so far:
“Accumulation” of Risk
JFCU staffing levels and information gathering powers (variable
quality of SAR reports)
Some technical legal coverage and process deficiencies
Worries about insufficient focus on terrorist financing matters
Some questions on the true extent of international co-operation
Feedback has been generally good so far but much work to do to
address the above issues (real or perceived)
Matching International Standards
Business Plan 2015
New international standard on
capital and liquidity
requirements for banks.
Reforms Basel II, which was
implemented in Jersey in 2008
Key changes are:
a. quality of capital
b. minimum capital
c. leverage ratio
d. liquidity
e. recovery and resolution planning
Phased implementation up to 1 January 2019
Basel III
Matching International Standards
Business Plan 2015
Development work with GFSC and IoMFSC
Discussion papers issued re capital, leverage and recovery
& resolution, industry views received and considered and
feedback papers issued
Draft DP on liquidity finalised recently and shared with CDs
Subsequently, will consult on implementation plan
Current prudential reporting system to be adapted to
new requirements and provide analytical reports for
supervision managers
Basel III
Matching International Standards
Business Plan 2015
Equivalence requirement from EU Directive on
Investment Services
Discussions are taking place with Government, Industry, GFSC,
HMT, the FCA and ESMA as to an appropriate Jersey response
and the equivalence process. Key to Jersey’s response will be
the acceptability, or otherwise of an “opt in” regime
A recent survey has been undertaken, with the help of the
Investment Business industry, to assess the potential impact
MIFID2 comes into force in January 2017
Setting the right regime will be critical to the significant
proportion of our investment business industry that has an
EU client base
MIFID2/MIFIR
Matching International Standards
Meeting Legal and Other Requirements
Business Plan 2015
Business Plan 2015
Introduction of Civil Penalties
Civil penalties -
Where are we?
Law passed by the States and Privy Council (11 Feb)
The Tariff Order (closes 2 March) and Statement of Principles
and Processes (closes 16 March) are currently at the
consultation stage
3 tariff bands, depending on seriousness. Maximum penalty
proposed is 8% of turnover
The Commission’s decision making process is being revised to
accommodate the requirements of the civil penalties regime
Likely that civil penalties will be in force Q2 2015
Meeting Legal & Other Requirements
Business Plan 2015
Introduction of Civil Penalties
Key features of the civil
penalty regime:
The Commission is required to publish a statement setting
out the principles it will apply in determining the imposition
and amount of a financial penalty
(including mitigating and aggravating factors)
Will only be applied to significant and material breaches of
the codes of practice
Applies to registered persons not individuals
Will not be retrospective (unless the breach continues beyond
the date the law comes into force)
Meeting Legal & Other Requirements
Business Plan 2015
Freedom of Information (FOI)
FOI has been in effect
for the States of Jersey
from January 2015
FOI = A general right to be supplied with information held by
the Commission, unless an exemption applies.
This does not mean that restricted individual firm information
will be released.
It comes into force for the Commission from January 2016.
Meeting Legal & Other Requirements
Business Plan 2015
Freedom of Information (FOI)
External Benefits
Good Information Management
provides the public with
the following benefits
Delivery of more efficient, cost effective services
Ensures that we make the best use of information
Increases the transparency of our data
Increases understanding of what the Commission does
Enables stakeholders better to engage and collaborate
with the Commission in achieving their goals
Enables stakeholders to hold the Commission to account
Meeting Legal & Other Requirements
Commission’s Statutory Functions
Business Plan 2015
Business Plan 2015
Development of a
new Registry platform for
the existing company,
partnership and foundation
registers is underway.
Utilising this new platform will make new registers easier to set up
The Government has asked the Commission to consider developing
new registers, such as:
Securities Interests register – tangible moveable assets
Aircraft register
Charities register
Trademarks register
Registers for Industry and Government
The Commission’s Statutory Functions
Business Plan 2015
Following discussions with interested
stakeholders in 2014, the Commission
plans to review its current fee setting model
and policy and issue revised proposals to Industry
for consultation in 2015.
The review will take into account
competitor jurisdictions and our own efficiency
and effectiveness.
Key policy questions are:
Reserves
When to review fees (annual vs ad hoc)
Each regulated business sector to
be self-funding or not
Sources of income
Types of fees/models
Date and method of fee collection
Enforcement activity and cost recovery
Commission Funding Review
The Commission’s Statutory Functions
Business Plan 2015
Criteria Behind Priorities
1 Facilitating Industry
access to markets,
& other benefits
to Industry
2 Matching
international
standards
3 Meeting
legal & other
requirements
4 Assisting the delivery
of the Commission's
statutory functions
and guiding principles
Business Plan 2015
Major Priorities for 2015
1 2 3 4
Change programme
Funds regime review
Supervisory review
MONEYVAL
Basel III
MIFID 2 / MIFIR
Civil financial penalties
Freedom of Information
Registers
Funding review
Business Plan 2015
Facilitated by
Lord Eatwell
Senator Philip Ozouf Assistant Chief Minister
John Harris Director-General
John Everett Director Funds & Fiduciary
Panel Discussion