Hawksford Trust Company Jersey Limited (Hawksford) (2021-08-25)

Summary

This is a public statement issued by the Jersey Financial Services Commission (JFSC) under Articles 25(b) and 25(c) of the Financial Services (Jersey) Law 1998, disclosing findings against Hawksford Trust Company Jersey Limited (Hawksford) for breaches of the Code of Practice for Trust Company Business (TCB Code) and the Financial Services (Trust Company Business (Assets - Customer Money)) (Jersey) Order 2000 (TCB Asset Order). It is an enforcement disclosure rather than a rule change, and the JFSC determined the matters were ineligible for a civil financial penalty.

• Background: A 2017 file review identified deficient corporate governance, systems and controls, and policies and procedures in Hawksford's administration of customer trust structures over the period 2001 to 2017.
• Failure to act in customers' best interests: Hawksford continued charging annual fees (about £2,200 p.a.) on a discretionary trust with lost customer contact and effectively valueless investments, billing and withdrawing roughly $42,000 (about £28,000) despite providing minimal or unnecessary services until the account was depleted in March 2013.
• Cross charging / misapplication of customer money: Systems and controls failed to detect fees paid from unconnected customers' pooled bank accounts on four occasions, totalling roughly £11,800, constituting misapplication of customer monies.
• Breaches found: Breach of TCB Code Principle 2 (highest regard for customers' interests) and Principle 3 (effective organisation and risk management), and TCB Asset Order Articles 6(1) and 6(2) (unauthorised use and improper disbursement of customer money).
• Aggravating factors: Issues persisted for an extended period (2003-2017) despite periodic review opportunities, and further cross charging instances were only identified after JFSC prompting.
• Mitigating factors: Hawksford proactively engaged an independent reporting professional, self-reported promptly, fully reimbursed affected customers, remediated systems, controls and training, and cooperated openly with the JFSC.

The statement is historical and case-specific; it does not itself impose new ongoing requirements but reaffirms existing TCB Code and TCB Asset Order obligations that apply to all registered persons carrying on trust company business in Jersey.

Key obligations

• Registered persons carrying on trust company business must have the highest regard for the interests of their customers (TCB Code Principle 2)
• Registered persons must organise and control their affairs effectively, with adequate risk management systems, for the proper performance of business activities (TCB Code Principle 3)
• Registered persons must ensure customer money is not used for another customer without proper authority (TCB Asset Order Article 6(1))
• Registered persons must ensure customer money is not disbursed unless properly payable to, by, on behalf of, or in respect of a customer, or otherwise properly transferred (TCB Asset Order Article 6(2))

Applies to

trust company business, registered persons