Approval of Trust Company Fees Order 2006.

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

An accurate record of “Ministerial Decisions” is vital to effective governance, including:

demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made (24/10/2006) regarding Approval of Trust Company Fees Order 2006.

Subject:	Approval of Trust Company Fees Order 2006
Decision Reference:	MD-E-2006-0184		Exempt clause(s):
Type of Report: (oral or written)	Written		Person Giving Report (if oral):
Telephone or e-mail Meeting?			Report File ref:
Written report – Title	Financial Services (Trust Company Business (Registration and Fees)) (Amendment) (Jersey) Order 2006
Written report – Author (name and job title)	Paul de Gruchy, Director, Finance Industry Development
Decision(s): To approve the Financial Services (Trust Company Business (Registration and Fees)) (Amendment) (Jersey) Order 2006, with a view to the Order coming into effect on 1 December 2006, and the proposed increase in fees taking effect from 1 January 2007.
Reason(s) for decision: The Order proposes an average increase in fees payable to the Commission by registered trust company businesses of 23%. This is the first such increase in 3 years, and is in excess of the rate of inflation during that period. The two main reasons for the need for such an increase are the trend for consolidation among trust companies that has reduced the number of registered entities and the relatively high regulatory risk that is associated with trust companies. Although the proposed fee increase is not welcomed by the finance industry, JATCo have confirmed that they understand the rationale for the increase and do not object to the Order being made. The proposed fee increase would enable the Commission to continue to supervise trust companies, using a risk-based approach, at a level the Commission considers appropriate.
Action required: Minister to sign, date and seal the Order and the Director, Finance Industry Development to notify the States Greffe, the Departmental liaison officer, the Commission and the law draftsman before forwarding the Order to the Greffe for archiving.
Signature: Senator P.F.C.Ozouf (Minister)		Date of Decision: 24 October 2006

Approval of Trust Company Fees Order 2006.

MINISTER FOR ECONOMIC DEVELOPMENT

FINANCIAL SERVICES (TRUST COMPANY BUSINESS (REGISTRATION AND FEES)) (AMENDMENT) (JERSEY) ORDER 2006 (the “Order”)

1 THE ISSUE

1.1 The Jersey Financial Services Commission (the Commission) have proposed that the Order be approved setting out a new tariff of fees to apply to trust company business from 1 January 2007.

1.2 It is recommended that the Minister approve the Order, and instruct the Director, Finance Industry Development, to notify the States Greffe, the Departmental liaison officer, the Commission and the law draftsman before forwarding the Order to the Greffe for archiving.

2 BACKGROUND

2.1 The policy of the Commission is that each industry sector should, insofar as is possible, bear the costs of its own regulation. Commission policy is also to rotate fee increases to each business sector, with a result that each sector has its fees increased, on average, every three years. Annual registration fees payable by trust company businesses (TCBs) in respect of their registration under the Financial Services (Jersey) Law were last increased three years ago.

2.2 In brief, it is proposed that tariffs for registration under the Law be increased by an average of 23%. This is well in excess of the cumulative rate of inflation over the past three years. The reasons for the proposed increase exceeding the rate of inflation include the trend for mergers within the sector, leaving a smaller number of registered persons carrying out the same amount of work, and the direct costs incurred by the Commission in relation to the regulation of this sector, which have increased as a result of a number of regulatory issues that have arisen.

2.3 The specific fees payable by a registered TCB is calculated by reference to the number of classes of work it is registered to undertake and the number of employees it has. The result is that larger companies and companies carrying out a wide range of work will pay greater annual fees than smaller companies or those that offer fewer services. The maximum annual fee payable by a TCB under the Order will be £37,500.

2.4 The Commission has consulted with the finance industry in general through Jersey Finance Limited and the Jersey Association of Trust Companies in relation to the proposed fee increases. The fee increases have not been welcomed by the industry, though following further correspondence and meeting with representatives of the trust company sector, no objection has been raised to the Order being made.

2.5 As part of the consultation process, industry representatives highlighted a small number of areas where it felt a different approach from the Commission could help to reduce costs. At least one of these areas – the ability of the Commission to recover supervision costs from those individual businesses that give rise to those costs – is a matter that the Commission has been considering for some time and expects to consult upon in the near future.

2.6 It is clearly regrettable whenever regulatory fees of any type are increased. However, the Commission believes that the level of risk associated with the TCB sector is relatively high, and a significant number of firms in that sector currently warrant greater oversight. As a result, it is necessary to ensure that the Commission has sufficient staff in this sector so as to carry out appropriate regulatory oversight, and this can at present only be funded by the proposed increase in fees.

3 RECOMMENDATION

3.1 It is recommended that the Minister approve the Order, and instruct the Director, Finance Industry Development, to notify the States Greffe, the Departmental liaison officer, the Commission and the law draftsman before forwarding the Order to the Greffe for archiving.

PAUL DE GRUCHY

Director, Finance Industry Development

20 October 2006