Financial Services Commission (Jersey) Law 1998: Amendment: Law drafting instructions

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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 19 December 2017:

MINISTERIAL DECISION REFERENCE: MD-C-2017- 156
DECISION SUMMARY TITLE: JFSC civil financial penalties regime: law drafting instructions to expand the scope of the regime
DECISION SUMMARY AUTHOR:	Lead Policy Adviser: Financial Crime	IS THE DECISION SUMMARY PUBLIC OR EXEMPT?		Public
REPORT TITLE: Law drafting Instructions – amendments to the Commissions Civil Penalty Regime
REPORT AUTHOR OR NAME OF PERSON GIVING REPORT: (if different from Decision Summary Author)	Jersey Financial Services Commission	IS THE REPORT PUBLIC OR EXEMPT		Exempt pursuant to Article 35 of the Freedom of Information (Jersey) Law 2011 (Formulation and development of policies)
DECISION AND REASON FOR THE DECISION: The Chief Minister approved the instruction of the Law Draftsman to prepare an amendment to the JFSC civil financial penalties regime to expand the scope of the regime to - (i) enable penalties to be imposed in respect of negligent contraventions of the JFSC’s regulatory Codes of Practice; and (ii) enable penalties to be imposed on principal persons of regulated firms. The Financial Services Commission (Jersey) Law 1998 provides a statutory framework under which the JFSC can impose a financial penalty on a regulated firm for a significant and material contravention of a JFSC Code of Practice (which set enforceable regulatory requirements). The law drafting instructions would amend the statutory provisions to: enable the Commission to impose financial penalties in respect of negligent contraventions of a Code of Practice; and enable the Commission to impose financial penalties on “principal persons” (directors and controllers) of a regulated firm, in certain circumstances. Taking each of these in turn:- Financial penalties for negligent contraventions Under the statutory framework there are presently three penalty bands, which cover, in summary, the following types of contraventions: Band 1 – contraventions consisting of late or missed notifications (to the Commission) required under a Code of Practice provision; Band 2 – contraventions (not falling into Band 3) that are not remediated within the timeframe determined by the Commission; Band 3 – intentional or reckless contraventions. The experience of the JFSC since the financial penalties regime came into force is that the threshold test currently in place of having to demonstrate that a contravention occurred intentionally or recklessly (Band 3) has resulted in the JFSC being unable to sanction, by the imposition of a financial penalty, serious misconduct committed through negligent behaviour. A new Band 2A is proposed that will allow for a financial penalty to be imposed for a contravention of a Code of Practice that resulted from negligent behaviour by a regulated firm. Imposing financial penalties on individuals Whilst the present statutory framework allows the JFSC to impose a financial penalty on a regulated firm that contravenes a Code of Practice, the Government and the JFSC are of the view that behavioural change is more likely to be achieved when principal persons know that, potentially, they will bear a financial penalty personally for poor conduct that resulted in a contravention of a Code of Practice. In addition, the imposition of penalties on regulated firms, rather than on principal persons, suffers from the problem that in many cases the regulated firm that has caused losses to its customers (as a result of contravening a Code of Practice provision) either has no remaining funds in any event; or where that is not the case, any money available would be better applied to compensating those who have lost money rather than the firm paying a civil financial penalty. Extending the financial penalties regime to principal persons will also bring the Island into line with Guernsey and the United Kingdom (and many other major jurisdictions).
RESOURCE IMPLICATIONS: Law drafting time will be required to draft these amendments. There are no other resource implications for the States of Jersey as a result of this decision.
ACTION REQUIRED: That law drafting instructions be sent by the Financial Services Unit to the Law Draftsman requesting that the amendment be drafted.
SIGNATURE: SENATOR IAN GORST			POSITION: CHIEF MINISTER

DATE SIGNED			EFFECTIVE DATE OF THE DECISION