Consultation Paper No. 1 2019: Proposals to revise the JFSC's statement of Principles and Processes for civil financial penalties

Summary

This is a JFSC consultation paper proposing changes to its Statement of Principles and Processes for civil financial penalties, which forms part of the JFSC's Decision-Making Process (DMP) document. The changes are needed because a 2018 amendment to the Commission Law extended the JFSC's power to impose civil financial penalties beyond registered persons to also cover 'principal persons' (such as directors, controllers, managers, chief executives or shareholder controllers) where they consented to, connived in, neglected to prevent, or aided a registered person's contravention of a Code of Practice.

• New penalty power: Confirms the JFSC may now fine a principal person where a registered person's contravention of a Code of Practice was committed with the principal person's consent, connivance or neglect, or was aided, abetted, counselled or procured by them.
• Penalty bands: Sets out four penalty bands for principal persons: Band 1 (failure to notify) up to £10,000; Band 2 (uncategorised, unremediated contravention) up to £200,000; Band 2A (negligent contravention) up to £300,000; Band 3 (intentional or reckless contravention) up to £400,000.
• Statement of Principles: Proposes inserting a new statement of principles into the DMP Appendix covering how penalties on principal persons will be determined.
• Statement of Processes: Proposes consequential and clarifying amendments to the DMP's process sections (Sections 1 to 3), including delegating Band 1 penalty decisions to a Board committee rather than the full Board of Commissioners.
• Settlement discount: Proposes a new footnote clarifying that settlement discounts will not apply to the portion of a penalty reflecting the principle that registered or principal persons should not profit from a contravention.
• Consultation questions: Asks two specific questions: on the proposed statement of principles for principal persons, and on the proposed amendments to the statement of processes.

This is a draft consultation only; no changes take effect until the JFSC reviews feedback and publishes a revised DMP. It is directed at registered persons and principal persons, and was circulated to a range of industry bodies listed in Appendix A.

Applies to

registered persons, principal persons (directors, controllers, managers, chief executives, shareholder controllers, or similar individuals), industry bodies and representative associations

Deadlines

• Friday 12 April 2019: Deadline for submitting written comments on the consultation paper to the JFSC or to Jersey Finance Limited (JFL).