Consultation Paper No.2 2018: Financial Services (Jersey) Law 1998 - Amendments to Schedules 1 and 2 (Regulation of Advice on Transfer Out of Defined Benefit Schemes)

Summary

This is a joint Government of Jersey and JFSC consultation paper proposing to expand Jersey's investment business regime under the Financial Services (Jersey) Law 1998 (FSJL) to capture advice on transferring out of, or converting, defined benefit pension schemes. It sets out draft amending orders to Schedules 1 and 2 of the FSJL and to the Client Assets Order, and invites feedback on the proposed approach and timing.

• Who is affected: Any person giving advice to investors or potential investors on the merits of disposing of, converting, acquiring or underwriting a defined benefit scheme, including firms currently unregulated for this activity.
• What changes: Schedule 1 of the FSJL would be amended so 'investments' includes defined benefit schemes (as defined in Article 130B(2) of the Income Tax (Jersey) Law 1961); Schedule 2 would list dealing, discretionary management and advice on defined benefit schemes as regulated investment business.
• Client Assets Order: A related amendment would exclude defined benefit schemes from the definition of 'investment' in the Financial Services (Investment Business (Client Assets)) (Jersey) Order 2001.
• Tax consequence: Newly regulated firms with a permanent establishment in Jersey that become registered investment business companies would meet the 'financial services company' definition and become chargeable to tax at 10 percent under the Income Tax (Jersey) Law 1961, rather than a potential 0 percent rate.
• Transitional period: The Amending Schedules Order proposes a 3 month transitional period after commencement for previously unregulated persons advising on defined benefit schemes to apply to the JFSC for authorisation to carry on investment business.
• Commencement: The Amending Schedules Order and the Client Asset Order Amendment are proposed to come into force 3 months after the day each is made; the Amending Schedules Order was expected to be signed no later than 25 April 2018.

This is a consultation document only, not yet in force; it seeks industry comment on the proposal, mechanism and timeframes, including a specific question on concerns about the manner and timing of implementation.

Key obligations

• Under the proposed transitional arrangements, persons currently advising on defined benefit scheme transfers who are not already regulated for investment business would need to apply to the JFSC for authorisation to carry on investment business within the 3 month transitional period following the Amending Schedules Order coming into force.
• Interested parties wishing to respond were asked to submit comments to the JFSC and/or Government by 18 April 2018 (or to Jersey Finance Limited by the same date for the coordinated industry response); industry body respondents were asked to also provide a summary of the individuals/institutions they represent.

Applies to

persons advising on transfers out of defined benefit pension schemes, investment business firms, companies not currently regulated under the Financial Services (Jersey) Law 1998 for pension transfer advice

Deadlines

• 18 April 2018: Deadline for interested parties to submit consultation comments to the JFSC/Government and to Jersey Finance Limited for the coordinated industry response.
• no later than 25 April 2018: Target date by which the Amending Schedules Order would be signed, barring unforeseen consequences.
• quarter 2 of 2018: Planned timing for the JFSC to publish feedback following the consultation.
• 3 months after the day the Amending Schedules Order is made: Proposed coming into force date of the Amending Schedules Order and the Client Asset Order Amendment.
• 3 month transitional period: Period proposed for currently unregulated persons advising on defined benefit schemes to apply to the JFSC for authorisation to carry on investment business.