Trustcorp Services Limited, and Messrs Michael Julian Kenney-Herbert (R), David William Roberts (R), David Henry Christopher Hill (R), William Thomas Davies (R) and William Henry Kenneth Simpson (R) (2012-01-31)

Summary

This is a public statement issued by the Jersey Financial Services Commission under Article 25 of the Financial Services (Jersey) Law 1998, following an investigation into Trustcorp Services Limited (TSL) and its group entities, and five named individuals (the Principals) responsible for its management. It sets out the Commission's findings of serious corporate governance failings and regulatory breaches, and the enforcement actions taken as a result.

• Key failings identified: Inadequate accounting records, excessive unquestioned reliance on intermediaries' instructions, unmanaged conflicts of interest, transactions executed without reference to constitutive documents, lack of fee transparency, an ineffective compliance and AML function (31 December 2005 to 25 November 2009), and failure to demonstrate adequate financial resources.
• Breach of licensing law: Certain non-regulated entities in the TSL group provided trust company business services without appropriate registration, constituting unauthorised financial service business under Article 7 of the FS(J)L.
• Breaches of the Codes of Practice: The Commission found breaches of Principles 1 to 5 of the Codes of Practice for Trust Company Business (integrity, regard for customers' interests, effective organisation and risk management, transparency, and adequate financial resources/insurance).
• Action against the Principals: Each Principal has been issued directions under Article 23(1) of the FS(J)L (and equivalent provisions in other regulatory laws) barring them from performing any function, employment or position with a registered person without the Commission's prior consent, and prohibiting them from performing financial service business.
• Cessation of TSL's business: TSL has been found not fit and proper to remain registered for Trust Company Business; it has submitted a cessation of business plan for an orderly wind-up, after which its authorisation will be revoked.
• Unaffected affiliates: Trustcorp (Jersey) Limited, Roanne Trust Company (Jersey) Limited and related Roanne entities were not part of the investigation and remain authorised.

The statement is a completed enforcement outcome rather than an ongoing rulemaking; it does not impose new requirements on the wider industry but records specific sanctions against TSL and the named individuals.

Key obligations

• TSL must complete the orderly wind-up of its business in accordance with its cessation of business plan submitted to the Commission, after which its Trust Company Business authorisation will be revoked.
• Each of the five named Principals must obtain the Commission's prior consent before performing any function, employment or position in the business of a registered person.
• Each of the five named Principals is prohibited from performing any function or service falling within the definition of financial service business under Article 2 of the FS(J)L.

Applies to

Trust Company Business registrants, registered persons under the Financial Services (Jersey) Law 1998, Trustcorp Services Limited and affiliated group entities, individuals acting as principals/directors of regulated trust company businesses