Investment Business Code of Practice

Summary

This is the Jersey Financial Services Commission's Code of Practice for Investment Business, issued under Article 19 of the Financial Services (Jersey) Law 1998. It sets out enforceable principles and detailed rules that every person registered under Article 9 of that Law to conduct investment business (a registered person) must follow in how it governs itself, treats clients, manages risk, holds financial resources and insurance, and deals with the JFSC. The current version is effective from 17 January 2022, incorporating amendments on sustainable investment disclosure and other miscellaneous changes.

• Seven core principles: Registered persons must conduct business with integrity, prioritise clients' interests, organise and control their affairs effectively with adequate risk management, be transparent in business arrangements, maintain adequate financial resources and insurance, deal openly and co-operatively with the JFSC, and avoid misleading, false or deceptive statements.
• Client-facing requirements: Obtain and document client information relevant to advice or discretionary services, assess suitability of products before recommending or investing, identify and protect vulnerable clients, and operate a client classification system (Retail, Professional per se, Elective Professional).
• Governance and controls: Maintain corporate governance arrangements, internal systems and controls, staff integrity and competence standards, Continuing Professional Development, a compliance function with a Compliance Officer, Money Laundering Reporting Officer and Money Laundering Compliance Officer, complaints handling procedures, and record keeping.
• Financial resources and insurance: Demonstrate ongoing compliance with the financial resource requirements in the First Schedule (including Adjusted Net Liquid Assets calculations) and hold adequate Professional Indemnity Insurance, including arranging JFSC-approved run-off cover when ceasing investment business.
• Class E modifications: Persons registered to conduct Class E investment business benefit from amended requirements under certain Code sections, as set out in the Second Schedule.
• Variances and consents: The Third Schedule lists specific instances where a registered person may apply in writing to the JFSC for consent or exemption, for example regarding employee qualifications, compliance department location, subordinated loan treatment, or ANLA calculation frequency.

Non-compliance with the Code is grounds for JFSC regulatory action, including written directions, public statements, financial penalties, or revocation of registration, and the Code is admissible in evidence in legal proceedings where relevant.

Key obligations

• Must not act, refrain from acting, or enter arrangements so as to avoid regulatory responsibilities under the Code
• Must act with due skill, care and diligence in fulfilling undertaken responsibilities to clients
• Where providing advice or exercising discretion, must obtain, document and maintain information about the client's circumstances and investment objectives relevant to the services provided
• Must not provide advice or exercise discretion for a client who declines to provide relevant information unless first disclosing that this may adversely affect the service provided
• Must identify and afford appropriate protection to vulnerable clients
• Must conduct due diligence and assess suitability of products and providers before recommending or investing on behalf of clients
• Must be able to demonstrate in writing that advice given or discretion exercised is suitable for the client
• Must maintain adequate financial resources in accordance with the First Schedule and demonstrate this on an ongoing basis
• Must maintain adequate Professional Indemnity Insurance, including arranging JFSC-consented run-off cover when ceasing investment business
• Must deal with the JFSC in an open and co-operative manner and comply with notification requirements under Principle 6
• Must not make statements that are misleading, false or deceptive
• Must maintain a compliance function including a Compliance Officer, Money Laundering Reporting Officer and Money Laundering Compliance Officer
• Must operate complaints handling procedures and maintain records as required by the Code
• Must classify clients as Retail, per se Professional or Elective Professional in accordance with paragraph 3.8
• Where a registered person cannot achieve full compliance temporarily, it must agree a plan of action with timescales with the JFSC in advance

Applies to

registered persons conducting investment business under Article 9 of the Financial Services (Jersey) Law 1998, persons registered to conduct Class E investment business

Deadlines

• 17 January 2022: Effective date of this revised Code for all registered persons.

Related documents

• This document is made under Financial Services (Jersey) Law 1998