In a statement on its website, the Jersey Financial Services Commission noted that although the implementation date for the changes to its regulatory requirements, outlined in September following a consultation, “has remained 1 January 2014”, island companies will have an extra six-month “transitional period” during which they may get up to speed with a package of other changes.
These other changes consist of amendments to seven Codes of Practice for Investment Businesses (IB Codes), which were not part of the RFA, and which were set out in a consultation paper in 2011.
“The Commission is aware that to give full effect to the amendments proposed to the [IB Codes], a number of registered persons may need to amend their client terms and conditions,” the JFSC said, explaining why it had decided to cut island investment businesses some slack in three areas.
These areas are:
- A "registered person" – that is, someone who is registered by the JFSC to carry out trust company business – will be required to "classify" only those clients who fall under the JFSC's definition of Class C and Class D investment business clients;
- With respect to the criteria that must be meet before a registered person may consider a client to be a "professional" client, the registered person must form an opinion based on the “transaction or services envisaged”, rather than the recently-consulted-on IB Codes, which referred to “services to be provided and transactions to be concluded”;
- The client classification, QCF Level 4 professional qualification, and amended remuneration requirements set down in the IB Codes will only need to be applied in those instances in which a registered person provides investment advice.
As reported, the RFA was conceived in the wake of the UK’s Retail Distribution Review (RDR), a package of regulatory reforms governing the way financial advice in the UK is provided and paid for, which took effect on 1 Jan 2013.
The JFSC unveiled the results of its RFA consultation in November 2012, less than a week after Guernsey – Jersey’s English Channel neighbour and sometime rival – launched a consultation of its own, on whether it should adopt an RDR-type review similar to the UK's.
The Isle of Man is also implementing a version of RDR in the New Year, which like Jersey's RFA, focuses on raising the standards of advisers' qualifications. The Isle of Man regulations do not involve commission restrictions, according to IoM director of financial services John Spellman.
Last year, Jersey wealth managers told International Adviser that they and their rivals on the island were unlikely to have a problem meeting the deadline for complying with the JFSC's new regulations, because , Jersey's advisory industry has been moving for some time in the direction of higher qualifications, and away from the use of commissions.
To read or download the JFSC's Feedback Paper on the RFA, click here.
