Consultation Paper No. 13 2020 - Bank Financial Reporting and Audit

Summary

This is a JFSC consultation paper proposing a new Banking Business (Accounts, Auditors and Reports) (Jersey) Order and related amendments to the Code of Practice for Deposit-taking Business (Banking Code). It seeks industry feedback on new and revised requirements for banks registered under the Banking Business (Jersey) Law 1991 concerning auditor appointment, financial statements, prudential returns, declarations of compliance, and publication of financial statements online. The paper is still at draft/consultation stage; nothing in it is yet legally binding.

• Appointment of auditors: Proposed statutory underpinning for how JIB and OIB auditors are appointed, replacing/reinforcing current Banking Code provisions (new AoA Code).
• Financial statements: New requirements on production and submission of financial statements to the JFSC (new FS Code).
• Prudential return: New requirements on production and submission of prudential returns (new PR Code).
• Declaration of compliance: New requirement for a Declaration of Compliance to be produced by registered persons regarding compliance with laws and regulations (new DoC Code).
• Publication of financial statements: New requirement intended to ensure depositors can access audited financial statements via registered persons' websites.
• Direct reporting to JFSC: Auditors/reporting persons must report certain exceptional and non-exceptional circumstances directly to the JFSC where depositor or customer interests could be prejudiced.
• Transitional provisions (proposed): Existing auditors would be deemed appointed under the New Order; existing exemptions/variations would continue only if notified to the JFSC within 3 months of the relevant provision coming into force.

The proposals mainly affect Registered Persons (Jersey Incorporated Banks and Overseas Incorporated Banks) and their auditors, with depositors as indirect beneficiaries through improved access to published financial statements. The JFSC is seeking written comments, including via a published response form or through Jersey Finance Limited's coordinated industry response, before finalising and enacting the New Order and revised Banking Code documents, which it anticipates completing before the end of Q3 2021.

Key obligations

• Respondents wishing to comment should submit feedback to the JFSC or to Jersey Finance Limited by the stated consultation deadline using the published response form where possible.
• (Proposed, not yet in force) Registered Persons with an existing exemption or variation from a corresponding Banking Code or GPO requirement would need to notify the JFSC of that exemption or variation within 3 months of the New Order's relevant provision coming into force, in order for it to continue.
• (Proposed, not yet in force) Reporting Persons (auditors) would be required to report certain exceptional and non-exceptional circumstances directly to the JFSC where depositor/customer interests could be prejudiced.

Applies to

Registered Persons under the Banking Law (Jersey Incorporated Banks and Overseas Incorporated Banks), Auditors (JIB Auditors, OIB Auditors, Branch Auditors), Depositors (indirectly affected)

Deadlines

• 31 March 2021: Deadline stated in the consultation's introductory section for submitting comments to the JFSC and to Jersey Finance Limited (JFL) coordinating the industry response.
• 28 February 2021: Deadline stated in Section 2.2 for the JFSC to receive comments on the consultation paper.
• before the end of H1 2021: JFSC's intended timing to publish feedback to this consultation.
• before the end of Q3 2021: Anticipated timing for completing enactment of the New Order and issuing the revised Banking Code documents, expected to impact year-end 2021 reporting.
• one month after commencement (proposed): Most provisions of the draft New Order would come into force one month after it is made.
• one week after commencement (proposed): The requirement to notify the JFSC of exemptions/variations would come into force one week after the New Order is made.
• 3 months after commencement (proposed): The requirement to publish financial statements on websites would come into force three months after the New Order is made.