Collective Investment Funds (Recognized Funds) (Compensation for Investors) (Jersey) Regulations 1988

Summary

These 1988 Regulations establish the compensation scheme for investors in Jersey recognized funds when a functionary (a trustee, manager or custodian) goes into default. They set out how the Viscount of Jersey administers claims, assesses and pays compensation to affected investors, and recoups the cost by levying contributions on other functionaries.

• Default and eligible liability: Define when a functionary is treated as in default (bankruptcy plus inability to meet claims) and what counts as an eligible civil liability owed to an investor.
• Claims process: On default, the Viscount must publish notices in the Jersey Gazette, London Gazette and a UK national newspaper inviting investors to submit claims within a specified period of at least 3 months.
• Assessment, limits and interest: The Viscount determines and pays compensation sums subject to statutory limits (up to 30,000 pounds fully covered, tapering above that, capped at 48,000 pounds per investor and an overall 5,000,000 pounds annual cap per calendar year), plus interest at 2% below LIBOR.
• Subrogation: Investors who accept compensation must assign their rights against the defaulting functionary to the Viscount, who can pursue recovery and retain amounts up to what was paid plus interest and costs.
• Compensation levy on other functionaries: The Viscount can levy contributions on all other functionaries of recognized funds (compensators), calculated by a formula based on each compensator's declared management/custodian/trustee fee income over the preceding 365 days.
• Reporting and record keeping: Compensators must furnish income statements when required, accompanied by an auditor's report, and keep accounting records demonstrating ability to comply.
• Co-operation duty: All functionaries of a recognized fund (or, for open-ended investment companies, the company itself, its liquidator or arrangement supervisor) must co-operate with the Viscount by providing information, books, documents and other assistance.

The Regulations remain in force as part of Jersey's collective investment funds framework, with amendments in 1992 and 1996 updating the compensation limits and inserting supplementary provisions on eligible liabilities.

Key obligations

• Functionaries of a recognized fund, and open-ended investment companies (or their liquidator/arrangement supervisor), must co-operate with the Viscount by providing information, books, documents and assistance needed to perform the Viscount's functions under the Regulations.
• Compensators must keep accounting records sufficient to demonstrate their ability to comply with the contribution levy provisions.
• When required by notice, a compensator must furnish a written statement of its annual management, custodian or trustee fee income for the preceding 365 days, accompanied by an auditor's report on the accuracy of the figures.
• A compensator must pay any compensation levy or interim levy contribution to the Viscount by the date specified in the notice, which must not be earlier than 4 weeks from the date of the notice.
• An investor must submit a statement of claim within the period specified in the Viscount's published notice (not less than 3 months after publication) to be eligible for compensation.
• An investor accepting compensation must agree to vest their existing rights in respect of the liability in the Viscount and assist in enforcing those rights (subrogation).

Applies to

recognized funds, functionaries (trustees, managers, custodians), unit trusts, open-ended investment companies, investors, professional investors

Deadlines

• not less than 3 months after the date of publication of the notice: Period within which investors must submit statements of claim following publication of a default notice by the Viscount
• not being earlier than 4 weeks from the date of the notice: Deadline by which a compensator must pay a compensation levy or interim compensation levy contribution as specified in the Viscount's notice
• 365 days immediately preceding the day on which the default occurred: Reference period for calculating a compensator's declared income for levy contribution purposes

Related documents

• This document is made under Collective Investment Funds (Jersey) Law 1988