Financial Services (Advertising) (Jersey) Order 200-.

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While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.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 (06/06/2008) regarding: Financial Services (Advertising) (Jersey) Order 200-.

Decision Reference: MD-E-2008-0118
Decision Summary Title:	Financial Services (Advertising) (Jersey) Order 200-		Date of Decision Summary:	6 June 2008
Decision Summary Author:	Alan Heard, Jersey Financial Services Commission (“JFSC”)		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Recommendation of the Jersey Financial Services Commission.		Date of Written Report:	3 June 2008
Written Report Author:	John Harris, Director General, JFSC.		Written Report : Public or Exempt?	Public
Subject: Financial Services (Advertising) (Jersey) Order 200- (the “Order”) Financial Services (Jersey) Law 1998 (“FSJL”)
Decision(s): In accordance with the recommendation of the Jersey Financial Services Commission, and pursuant to Articles 31 and 42 of the FSJL, the Minister agreed to make the Order. The Minister instructed officers to make the necessary arrangements for the signed Order to be published and laid before the States.
Reason(s) for Decision: To establish legal standards in respect of financial service advertisements. To enable various remedial powers of the FSJL to be used in respect of unsatisfactory financial service advertisements which currently do not work without the reference point of the Order. To enable the Financial Services (Investment Business (Overseas Persons – Exemption)) (Jersey) Order 2001 to operate effectively. To address relevant recommendations arising from the assessment of Jersey by the International Monetary Fund published in 2003.
Resource Implications: The draft Order will not have any effect on the financial or manpower resources of the States of Jersey.
Action required: Officers to undertake the necessary arrangements for the signed Order to be published and laid before the States.
Signature:		Position: Minister for Economic Development
Date Signed: 6 June 2008		Date of Decision: 6 June 2008

Financial Services (Advertising) (Jersey) Order 200-.

Senator P Ozouf Minister – Economic Development PO Box 843 Jubilee Wharf 24 Esplanade St Helier Jersey JE4 0UT	From the office of the Director General Telephone: + 44 (0) 1534 822011 E-mail: s.cadigan@jerseyfsc.org
	Your Ref.:
	Our Ref.:		JH/jra
		3 June 2008

Dear Minister

Recommendation of the Jersey Financial Services Commission in respect of the issue of the Financial Services (Advertising) (Jersey) Order 200-

under the Financial Services (Jersey) Law 1998 (“FSJL”)

Issue and Recommendation

The Minister is requested and recommended to issue the above Order (“the AO”) in the form shown in Appendix 1.

The issue of the AO will:

Establish legal standards in respect of financial service advertisements (“FSAs”);

Enable various remedial powers of the FSJL to be used in respect of unsatisfactory FSAs, which currently do not work without the reference point of an AO;

Enable the Financial Services (Investment Business (Overseas Persons – Exemption)) (Jersey) Order 2001 to operate effectively, which it currently does not, as it depends upon the existence of an AO, to which it cross refers; and

Address related recommendations of the 2003 IMF report, which identified the need for an AO.

Background

The issue of an AO was originally consulted upon in 2002. Whilst progress was made subsequently at industry steering group level, momentum has at times been lost in the interim. However, a second consultation exercise was launched in October 2007 and the proposed AO was the subject of a number of industry workshops held at that time.

Jersey Finance Ltd provided a formal response to the consultation paper in January 2008. This did not reflect significant issues and effectively concluded the consultation, albeit individual discussions continued for a period on specific items of detail.

Minor changes have been made to the draft Order subsequent to the consultation, and these have recently been advised to Jersey Finance Ltd, which has confirmed its agreement for the Order to be signed. These proposals are therefore fully accepted on the part of Industry.

The Advertising Order

Article 31 of the FSJL envisages that an Order will be made “relating to the issue, form and content of financial service advertisements”. The AO will become the key standard setting legislation for the conduct of sales communications with customers, or prospective customers, in respect of activities covered by the FSJL.

In the absence of an AO, the Commission’s capacity to fulfil its functions concerning client/investor protection and protecting the reputation of the Island in commercial and financial matters is inhibited. No legal trigger exists for alternatives to criminal sanction, such as the injunction and remedial powers under Article 24. In cases of mis-selling, for example, reliance would instead turn to Article 30, which relates to misleading statements and practices and which would potentially result in much more serious sanction. The establishment of an AO will provide for meaningful sanctions that fall short of imprisonment or criminal fines.

Currently, because criminal sanctions may not be proportionate to the circumstances, inaction on the part of the Commission may result from malpractice in this area, reducing the Island’s regulatory effectiveness. Jersey’s defences in this respect could therefore currently be considered to be behind international best practice, as reflected in the 2003 IMF report.

In accordance with the established light touch approach to Money Service Businesses (“MSB”) it is proposed that these be exempted from the requirements of the AO. In many countries, money service business is regulated for AML/CFT purposes only, as is the case in the UK. This though, will change in the EU as a result of the Payment Services Directive, which will apply a prudential regime to payment service providers. The Commission originally took the view that it was appropriate to regulate MSB through regulatory legislation – but to apply a lighter touch – so that our regime was not significantly more onerous than that applied elsewhere. In time we will wish to review our approach.

Recommendation

The Minister is duly recommended to issue the proposed enclosed Order.

Yours sincerely

John Harris

Director General