Consultation Paper No. 10 2018 - Amendments to Codes of Practice

Summary

This is a JFSC consultation paper (Consultation Paper No. 10 2018) proposing amendments to nine sector-specific Codes of Practice issued under Jersey's regulatory laws. It covers both generic changes applied across most Codes and Code-specific changes, plus a separate discussion (not yet a firm proposal) on future alignment of the Codes' structure and high-level principles.

• Payment of financial penalties: Each Code except the Certified Funds Code would require that a person on whom the JFSC imposes a financial penalty pays it personally, that insurers do not pay it, and that insurance should not be sought to cover such penalties (insurance for defence costs remains permitted).
• Cyber risk management: A new note would be added to Section 3 of each Code except the AIF Code clarifying that registered persons are expected to have a documented cyber security policy addressing identification, protection, detection, response and recovery (aligned with the NIST framework).
• Client, Customer and Fund Money: The TCB, GIMB, FSB and IB Codes would be amended to require an independent review, at least annually, of controls over client, customer or fund money held or controlled by the registered person.
• PII arrangements: Generic amendments are proposed to professional indemnity insurance (PII) requirements across the Codes.
• Code-specific changes: Individual amendments are also proposed to the AIF, Banking, Certified Funds, FSB, GIMB, IB, Insurance, MSB and TCB Codes, detailed in redlined versions in Appendices B to J.
• Alignment of the Codes: Chapter 5 separately seeks feedback on longer-term alignment of terminology, numbering, emphasis and high-level principles across the Codes; this is a discussion point, not a current proposal for implementation alongside the Chapter 4 amendments.

The JFSC invited written comments on the proposals by 7 January 2019, either directly or via Jersey Finance Limited. Subject to any revisions following consultation, the amended Codes were intended to be issued during Q1 2019 and to come into force two months after issue. As a consultation paper, the document itself creates no binding obligations; it describes obligations that would apply to registered persons once the amended Codes are adopted.

Key obligations

• Once adopted, a registered person on whom the JFSC imposes a financial penalty must pay it personally; insurers must not pay it and insurance must not be obtained to cover financial penalties (proposed, all Codes except Certified Funds Code)
• Once adopted, registered persons (except under the AIF Code) will be expected to maintain a documented cyber security policy covering identification, protection, detection, response and recovery of assets and risks
• Once adopted, registered persons under the TCB, GIMB, FSB and IB Codes that control client, customer or fund money must implement an independent review of controls over that money at least annually
• Interested parties wishing to comment must submit written responses to the JFSC or to Jersey Finance Limited by 7 January 2019

Applies to

registered persons, alternative investment fund services businesses, deposit-taking (banking) businesses, certified funds, fund services businesses, general insurance mediation businesses, investment businesses, insurance businesses, money service businesses, trust company businesses

Deadlines

• 7 January 2019: Deadline for submitting written comments on the consultation paper to the JFSC or to Jersey Finance Limited
• Q1 2019: Intended issuance of the amended Codes of Practice (subject to consultation feedback) and provision of feedback on Chapter 5 alignment questions
• two months after issue: Proposed commencement date for the amended Codes of Practice once issued