Guidance Note: Treatment of Insurance Companies under the Financial Services (Jersey) Law 1998 in respect of Investment Business (2010-09-13)

Summary

This JFSC guidance note clarifies how insurance companies carrying on long term insurance business are treated under the Financial Services (Jersey) Law 1998, in light of overlapping registration requirements with the Insurance Business (Jersey) Law 1996. It sets out the JFSC's policy to avoid duplicate regulation of the same activity under two regimes.

• Product providers only: Insurance companies that merely effect long term insurance contracts and hold a permit under the Insurance Business (Jersey) Law 1996 can remain regulated solely under that Law, without needing separate registration under the Financial Services (Jersey) Law 1998 for that activity.
• Investment advice triggers registration: If an insurance company provides investment advice as defined under the Financial Services (Jersey) Law 1998, it must become a registered person under that Law for the advisory activity, satisfying the JFSC that it is fit and proper and paying fees as any other investment adviser would.
• Modified regime for insurer advisers: Insurance companies registered as advisers will not be subject to certain provisions that apply to other registered persons, including Articles 13 to 16 (principal persons and shares) and Articles 17 to 18 (accounts and audit) of the Financial Services (Jersey) Law 1998, and related Codes of Practice provisions not concerned with the provision of advice; the proposed Client Assets Order may also not apply to them.
• Advertising controls: The JFSC intends to introduce a Control of Advertising Order under the Financial Services (Jersey) Law 1998 governing advertisements by independent advisers for long term insurance products, and is considering a similar or identical Order under Article 35 of the Insurance Business (Jersey) Law 1996 to control insurance advertisements generally, with reference to UK regulatory standards.

The note is intended to prevent insurance companies being regulated twice for the same underlying activity while keeping the two regulatory regimes coherent and complementary.

Key obligations

• An insurance company that provides investment advice as defined under the Financial Services (Jersey) Law 1998 must become a registered person under that Law in respect of that advisory activity.
• A registered insurance company adviser must satisfy the JFSC that it is fit and proper to be registered in that capacity.
• A registered insurance company adviser must pay fees under the Financial Services (Jersey) Law 1998 in the same way as other investment advisers.
• A registered insurance company adviser remains subject to Codes of Practice provisions relating to the provision of advice, notwithstanding disapplication of other provisions.

Applies to

insurance companies carrying on long term business, permit holders under the Insurance Business (Jersey) Law 1996, investment advisers registered under the Financial Services (Jersey) Law 1998