Consultation Paper No. 11 2019: Proceeds of Civil Financial Penalties

Summary

This is a Jersey Financial Services Commission consultation paper seeking industry feedback on how the JFSC will handle money it receives as proceeds of Civil Financial Penalties imposed under Articles 21A to 21G of the Financial Services Commission (Jersey) Law 1998. It sets out the JFSC's proposed approach to retaining and allocating these proceeds rather than imposing any new binding rule at this stage.

• Retention as income: The JFSC proposes to retain penalty proceeds as part of its income rather than issuing cash rebates to affected firms, citing administrative burden and cash flow concerns.
• Fee reduction by class: Proceeds would be applied to reduce future annual fees charged to registered persons of the same class of business as the person on whom the penalty was imposed, using eight defined business classes (e.g. Trust Company Business, Investment Business, Banking Business).
• Allocation across classes: Where a penalty relates to contraventions spanning multiple classes of business, proceeds would be allocated proportionally based on prior year fee income from each relevant class.
• Timing and reporting: Fee reductions would generally apply in the fee period following receipt of proceeds (though later periods are possible), only once a penalty is settled in full, and the JFSC would report on the application of proceeds in its Annual Report.
• Four consultation questions: The paper poses four specific questions on retention as income, definition of class of business, proportional allocation across classes, and the approach to future fee reductions.

As a consultation, this document does not itself create binding requirements; it invites comments from registered persons and industry bodies before the JFSC finalises its approach, with feedback expected in the first quarter of 2020.

Applies to

registered persons under the Regulatory Laws, Alternative Investment Fund Services Business, Banking Business (deposit-taking business), Fund Services Business, General Insurance Mediation Business, Insurance Business, Investment Business, Money Service Business, Trust Company Business

Deadlines

• 13 January 2020: Deadline for interested parties to submit written comments on the consultation directly to the JFSC.
• 10 January 2020: Deadline for comments to be submitted to Jersey Finance Limited for inclusion in its coordinated industry response.
• first quarter of 2020: JFSC intends to publish feedback to this consultation paper.