Regulatory Settlements (Issued 2022-02-10)

Summary

This JFSC policy statement explains how the Jersey Financial Services Commission conducts regulatory settlements, a voluntary process to resolve a regulatory investigation that concludes with the JFSC imposing a regulatory sanction on the Subject. It sets out when settlement discussions may be offered, what a Subject must accept to take part, how civil financial penalty discounts are calculated, the settlement process itself, and the ongoing effect of a settlement agreement.

• Who is a Subject: A natural or legal person who is the subject of a decision under the JFSC's published Decision-Making Process, in respect of matters arising under the regulatory laws (including the Financial Services (Jersey) Law 1998, Banking Business (Jersey) Law 1991, Insurance Business (Jersey) Law 1996, Collective Investment Funds (Jersey) Law 1988, Alternative Investment Funds (Jersey) Regulations 2012, and the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008).
• Conditions to enter settlement discussions: The JFSC will only discuss settlement once it has enough information on the suspected misconduct, and the Subject must acknowledge full and frank disclosure expectations, accept its misconduct, and accept that a regulatory sanction will be imposed if settlement succeeds.
• Discount tiers for civil financial penalties: Penalty discounts are graduated by how early settlement is reached: up to 50% before conclusion of Stage 1 (Investigation), up to 25% before conclusion of Stage 2 (Executive review), and up to 5% before conclusion of Stage 3 (Board DMP Committee consideration).
• Process mechanics: Settlement discussions are offered by letter, conducted without prejudice, are voluntary and may be withdrawn from at any stage, and typically involve one meeting at which the Subject's representatives must have authority to agree terms, including any penalty amount.
• Effect of settlement: A signed settlement agreement becomes part of the Subject's compliance record and may be taken into account by the JFSC in assessing any future regulatory response.

Key obligations

• To be considered for settlement discussions, a Subject must acknowledge that full and frank disclosure is expected during discussions
• A Subject entering settlement must accept its misconduct as a condition of settlement
• A Subject must accept that, if settlement succeeds, the JFSC will impose a regulatory sanction
• Where a Subject is not a natural person, its attending representatives must have authority to agree settlement terms, including the quantum of any civil financial penalty, at the settlement meeting

Applies to

banks, insurance businesses, financial services businesses, collective investment funds, alternative investment funds, bodies supervised under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008, natural persons and legal persons subject to JFSC regulatory investigations

Deadlines

• before the conclusion of Stage 1 (Investigation): Settlement at this stage attracts a discount of up to 50% on the civil financial penalty otherwise expected
• before the conclusion of Stage 2 (Review of the case by the Executive): Settlement at this stage attracts a discount of up to 25% on the civil financial penalty otherwise expected
• before the conclusion of Stage 3 (Consideration of the case by the Board DMP Committee): Settlement at this stage attracts a discount of up to 5% on the civil financial penalty otherwise expected