Financial Services (Amendment of Schedule 2 to Law) (No.3) (Jersey) Order 200-

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A decision made (21.01.09) to make the Financial Services (Amendment of Schedule 2 to Law) (No.3) (Jersey) Order 2009

Decision Reference: MD-E-2009-0012

Decision Summary Title :

Financial Services (Amendment of Schedule 2 to Law) (No. 3) (Jersey) Order 200-

Date of Decision Summary:

16 January 2009

Decision Summary Author:

Finance Industry Development Executive

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

n/a

Written Report

Title :

Financial Services (Amendment of Schedule 2 to Law) (No. 3) (Jersey) Order 200-

Date of Written Report:

January 2009

Written Report Author:

Finance Industry Development Executive

Written Report :

Public or Exempt?

Public

Subject:

Financial Services (Amendment of Schedule 2 to Law) (No. 3) (Jersey) Order 200-

Decision(s):

The Minister made the Financial Services (Amendment of Schedule 2 to Law) (No. 3) (Jersey) Order 2009 (“the Order”)

Reason(s) for Decision:

It has recently become apparent that the exemption from registration under the Financial Services (Jersey) Law 1998 (“the Law”) created by the Financial Services (Investment Business (Fund Services Business Exemption)) (Jersey) Order 2007 is narrower than intended. The Order will remedy this by amending the Law to extend the exemption to encompass the class of fund services business dealing with distributors of certain non-Jersey funds, as was originally intended.

Resource Implications:

There are no measurable financial or manpower costs for the States.

Action required:

The Minister to sign, date and seal the Order and the Order to be returned to the States Greffe without delay.

Signature: Senator A.J.H.Maclean

Position: Minister for Economic Development

Date Signed:

Date of Decision (If different from Date Signed):

Financial Services (Amendment of Schedule 2 to Law) (No.3) (Jersey) Order 200-

Financial Services (Amendment of Schedule 2 to Law) (No. 3) (Jersey) Order 200- (“the draft Order”)

1. ISSUE AND RECOMMENDATION

1.1. The Financial Services (Investment Business (Fund Services Business Exemption)) (Jersey) Order 2007 (“the 2007 Order”) was intended to amend the Financial Services (Jersey) Law 1998 (“the Law”) to create an exemption from registration for overseas distributors of certain non-Jersey funds.

1.2. It has recently become apparent that the exemption created by the 2007 Order is narrower in practice than expected. The draft Order will remedy this by amending the Law to extend the exemption to encompass the class of fund services business dealing with distributors of these funds, as was originally intended.

1.3. It is recommended that the Minister signs, dates and seals the Order and that it be returned to the States Greffe without delay

2. BACKGROUND

2.1. The 2007 Order was intended to amend the Law to create an exemption from registration under the Law for overseas distributors of certain non-Jersey funds, where:

(i) the distributor is supervised for fund services business in its home jurisdiction; and

(ii) the representative of the overseas distributor dealing with the prospective investor in Jersey does so in accordance with appropriate elements of the Fund Services Business Codes of Practice.

2.2. The relevant funds are Undertakings for Collective Investment in Transferable Securities (“UCITS”), authorized funds in the United Kingdom, Class A funds in Guernsey and Authorised Funds in the Isle of Man.

2.3. It transpires that in practice the exemption created by the 2007 Order covers solely investment business under the Law and not, as was also the intention, fund services business. This is a technical issue which has only recently become apparent following an application for a fund services business licence by an overseas distributor who would otherwise be exempt.

2.4. It is important for the position to be rectified and for the said exemption to work as intended. Without it, major retail funds (such as UCITS), which are fully regulated, cannot be sold into Jersey without setting up a local office with FSB registration or appointing a local FSB authorised representative.

2.5. The draft Order will extend the exemption from financial services business to encompass the class of fund services business dealing with distributors of funds of the type described above. Thus, only highly regulated funds will be able to make use of the exemption. The draft Order does this by introducing a further paragraph to Part 4 to Schedule 2 of the Law. Schedule 2 exempts specified activities from classes of financial service business and consequently from the requirement to be registered under the Law.

2.6. The Law provides for the Minister to make an Order amending Schedule 2 of the Law on the recommendation of the Commission. Consultation has been carried out with industry through Jersey Finance Limited. There has been no objection to the draft Order.

3. RECOMMENDATION

3.1. It is recommended that the Minister signs, dates and seals the Order and that it be returned to the States Greffe without delay.

FINANCE INDUSTRY DEVELOPMENT EXECUTIVE

16 January 2009