Consultation Paper No. 7 2016 - Class O Financial Service Business

Summary

This is a JFSC consultation paper seeking industry feedback on two additional transitional provisions to be added to the previously proposed rewording of Class O financial service business under the Financial Services (Financial Service Business) (Jersey) Order 2009. The core rewording of Class O was already consulted on in 2012 and is not reopened here; this paper only addresses two implementation difficulties that had delayed finalising that change.

The revised Class O definition will restrict Class O registration to services benefiting only natural persons who are tax resident in Jersey (directly or through Jersey incorporated companies). Some current Class O registrants may no longer qualify once the new wording takes effect.

• Transitional relief: A service provider that met the old Class O requirements before the Amending Order takes effect will be treated as still compliant for 6 months after commencement, or, if it has an outstanding application for registration under another class, until that application is determined.
• Unknown client status change: If a client's tax residency status changes without the provider's knowledge, the provider will be treated as compliant until 3 months after the non compliance is discoverable by reasonable diligence.
• Consultation questions: JFSC asks respondents whether the proposed provisions could cause issues, whether there are concerns with the transitional provisions, and whether further transitional provisions are needed.
• Next steps: After considering responses, JFSC will recommend the Chief Minister make the Amending Order, which will come into force one month after being made.

Affected firms currently holding Class O registration who cannot meet the new criteria will need to either exit non compliant client relationships or apply to JFSC for registration under another relevant class of financial service business within the transitional windows described.

Key obligations

• Registered Class O service providers who cannot satisfy the new Class O criteria must, within 6 months of the Amending Order's commencement, either exit non-compliant client relationships or apply to JFSC for registration under another relevant class of financial service business (or await determination of an already-pending application).
• Where non-compliance arises from an undiscovered change in a client's tax residency, the provider must address the non-compliance (exit relationship or seek alternative registration) within 3 months of when the non-compliance was discoverable by reasonable diligence.
• Interested parties wishing to respond to the consultation must submit written comments to Jersey Finance Limited or directly to the JFSC by 28 October 2016.

Applies to

Class O registered persons, financial service business providers, trust companies, registered persons conducting Class O financial service business

Deadlines

• 28 October 2016: Deadline for submitting consultation responses to Jersey Finance Limited or directly to the JFSC.
• 6 months after commencement of the Amending Order: Transitional period during which existing Class O registrants who no longer meet the new criteria are treated as compliant, or until an outstanding application for another class of registration is determined.
• 3 months after non-compliance is discoverable by reasonable diligence: Period during which a provider affected by an undiscovered change in a client's tax residency is treated as still compliant with Class O requirements.
• one month after the Amending Order is made: The Amending Order will come into force one month after the Chief Minister makes it.

Related documents

• This document amends Financial Services (Financial Service Business) (Jersey) Order 2009