Financial Services (General Insurance Mediation Business (Client Assets)) (Jersey) Order 2005

Summary

This Order sets client asset protection rules for persons registered under the Financial Services (Jersey) Law 1998 to carry on general insurance mediation business. It governs how registered persons (insurance brokers/intermediaries) must hold, segregate, account for and reconcile insurance money received from or on behalf of clients, and creates a statutory trust and pooling regime that applies if a registered person, bank or intermediary defaults.

• Holding insurance money: Insurance money must generally be held at an approved bank, held in one or more insurance broking accounts distinct from the registered person's own funds, and paid in no later than 3 business days after receipt.
• Segregation and accounting: Registered persons must avoid mixing insurance money with other money and must be able to accurately identify and trace individual client transactions.
• Bank undertakings: Before operating an insurance broking account, the registered person must obtain a written undertaking from the bank confirming trustee status, no set off rights, and clear account titling, unless the Commission waives this requirement.
• Reconciliation: Balances on each insurance broking account must be reconciled against the bank's statement at least monthly, within 10 business days of the reconciliation date, with discrepancies corrected immediately (subject to limited exceptions).
• Withdrawals: Money may only be withdrawn from an insurance broking account for specified purposes, such as payment to the client or insurer, payment of the registered person's fees, or transfer to another qualifying account.
• Client disclosures: Registered persons must disclose to clients when a waiver applies to holding money outside an approved bank, when passing insurance money to an intermediary outside Jersey, and that designated accounts do not have the protection of Part 3 (the default/trust provisions).
• Default and pooling: On a pooling event (default of the registered person, a bank, an intermediary or insurance company, or certain Commission directions), insurance money held in protected accounts is held on statutory trust for clients, insurance companies and intermediaries according to their respective shares.
• Exemptions: A person may apply to the Commission for exemption from the Order if they are an 'appropriately regulated person' under specified overseas or UK regulatory regimes; the Commission may later revoke such an exemption.

The Order also addresses policy documents and contains miscellaneous and interpretive provisions. It commenced on 1 December 2005 and remains in force as an official consolidated version current from 1 January 2019.

Key obligations

• A registered person must ensure all insurance money is held at an approved bank unless the Commission has granted a waiver.
• A registered person must pay insurance money received into an insurance broking account as soon as possible and no later than 3 business days after receipt.
• A registered person must not mix insurance money with other money and must ensure individual transactions can be accurately identified and traced.
• Before operating an insurance broking account, a registered person must obtain a written undertaking from the bank as to trust status, no set off, and account titling (unless waived).
• A registered person must reconcile the balance on each insurance broking account with the bank's statement at least once each month, within 10 business days of the reconciliation date, and correct differences immediately (subject to limited exceptions).
• A registered person may withdraw money from an insurance broking account only for the specific purposes listed in Article 9.
• A registered person must specify in a written agreement with the client who is to receive interest earned on insurance money held for that client.
• A registered person must inform a client whose account is a designated account that the account does not have the protection of Part 3 (statutory trust on default).
• A registered person must advise clients when insurance money may be, or is, passed to an intermediary outside Jersey and of the differing legal protections that may apply.
• On applying for a waiver to hold money with a non approved bank or to dispense with a bank undertaking, a registered person must meet and continue to satisfy the conditions the Commission specifies.

Applies to

registered persons carrying on general insurance mediation business (insurance brokers/intermediaries), approved banks, insurance companies, insurance intermediaries acting as third parties

Deadlines

• no later than 3 business days after the day on which the money is received: Deadline for a registered person to pay insurance money received into an insurance broking account.
• at least once each month, within 10 business days of the date to which the reconciliation relates: Required frequency and timing for reconciling insurance broking account balances against bank statements.
• 1 December 2005: Commencement date of the Order.

Related documents

• This document is made under Financial Services (Jersey) Law 1998