On 19 January 2018 the Jersey Financial Services Commission (the JFSC) published its Supervisory Examination Guide (the Guide). The Guide, which is effective immediately, gives a detailed overview of the Supervisory Examinations (Examinations) conducted by the JFSC. Examinations are a key tool used by the JFSC to detect and deter breaches of regulatory standards as well as improving compliance.
Material update to Examinations
Although the Examinations process remains relatively unchanged, there are now key changes to the remediation process of the Examination. During the remediation process, the JFSC will no longer issue recommendations and timescales for completion to address any findings. It will be the responsibility of the entity to devise a plan detailing how, and by when, any issues will be addressed. We set out below a summary of the Examination process.
Initial contact will be made by the entity's Supervision Manager who is responsible for notifying the entity of proposed Examination dates. Subject to both parties reaching an agreement on the Examinations dates, the entity will receive a formal notification, via email or letter, confirming the Examination dates, its duration and scope, and the JFSC Examination team members.
Together with the formal notification, the entity will receive an Information Request (IR) from the JFSC. The IR document will contain details of information and documents the Examination team will require ahead of the Examination. The Examination team will submit the IR 6 to 8 weeks prior to the start of the Examination to allow the entity adequate time to comply with its requirements. After receiving the IR, the entity will have 2 weeks before the on-site review to respond to the IR.
Ahead of the Examination, the Examination team will request a preliminary meeting to be held. The aim of the face-to-face meeting is to address any concerns in advance of the Examination and ensure the requirements of the IR request are understood. Although there is no mandatory requirement to hold a preliminary meeting, it will be considered best practice as it reduces the need for an extensive opening meeting on the first day of the Examination.
Desk based review
During the desk-based review, the Examination team will review on the details of the IR submissions before the on-site Examination. This will allow the Examination team to create an examination plan to be used as a guide for the on-site review.
During the on-site review, the Examination team will focus on executing the examination plan. The Examination team will discuss matters relating to the scope of the Examination with appropriate members of staff and review relevant customer files relating to business transactions or customer due diligence. The JFSC will operate on a "no surprises" basis in relation to Examination findings; accordingly, all potential issues will be discussed with appropriate staff members of the entity.
Although Examinations are planned and executed on a narrowly defined scope, the Examination team may, when deemed necessary, alter the scope of the Examination. For instance, the scope of the Examination will increase where potential issues or serious failures are discovered. However, in accordance with the JFSC's "no surprises" policy, any variation to the scope of Examination will be communicated to the entity.
On completion of the on-site review, the JFSC will review its findings off-site and compile a first draft of the Examination report. Prior to issuing the Examination report, the JFSC will hold a debrief meeting with the relevant entity within 27 days of completing the on-site visit to review any findings of the Examination.
Following the debrief meeting, a draft Examination report will be issued to the entity 10 working days. The entity will then have 20 working days to respond in writing regarding any factual inaccuracies of the draft Examination report. Once the entity and JFSC have reached an agreement concerning the factual accuracy of the report, a final report will be issued to the entity.
Subject to the Examination resulting in findings, the entity has 20 working days from the date of receipt of the final Examination report to respond to the Supervision Manger setting out an action plan of how, and by when, any findings will be addressed. Upon receipt, the Supervision Manager will consider the appropriateness of the entity’s action plan and confirm its acceptability within 10 working days.