Top Takeaways from the JFSC Virtual Examinations Webinar
19 June 2020
The Jersey Financial Services Commission has shared a video of its virtual examinations webinar. It is well worth a watch to learn how the JFSC's virtual examinations have been working and what to expect for the remainder of 2020 and into 2021. They provided details on timescales, comfort in relation to how virtual interviews are being carried out and some insight into the examination feedback that we can expect from them shortly. We haven't tried to summarise all of the information shared by the JFSC but we thought we'd share our top four takeaways:
1. JFSC Recommendations: The JFSC's post-examination reports no longer contain recommendations on how to address their findings. The JFSC explained that each firm knows its own business best, so it is more appropriate for the firm to make its own remediation proposals than for the JFSC to recommend something that might not be the most appropriate course of action for the firm. This gives firms the opportunity to design a remediation plan that is realistic and suitable for its business and most likely to be effective.
2. Challenging Reports: The JFSC has noticed an increase in firms challenging the facts included in draft post-examination reports. The JFSC noted that they are reliant on the information received during the examination. If a firm thinks that the information requested by the JFSC will not demonstrate how the firm complies with the relevant requirements under review, the JFSC suggested that firms should have an early conversation to highlight their concern. If necessary, JFSC examiners can then make a formal request for the relevant additional information, to get the full picture of how a firm complies. This should improve the process for finalising the post-examination report, by helping to ensure that the JFSC has all relevant facts, early in the examination process. Firms are encouraged to consider how their documentation fits together when responding to information requests from the JFSC during an examination.
3. Focus points for 2021: Financial crime will remain an area of focus for the JFSC's 2021 examinations. The JFSC may also repeat some of the themes that they have focussed on in previous years. This would enable the JFSC to assess whether firms have learnt from previous feedback papers, to ensure that their business is meeting regulatory obligations. Our view is that, if the JFSC has previously highlighted examples of poor conduct in its feedback papers, and a firm is subsequently found to have failed by persisting with poor conduct that mirrors those examples, the JFSC may be more inclined towards enforcement action than in other cases. If your firm hasn't done so already, now is the time to make sure that previous feedback papers have been reviewed and that any necessary improvements, arising from those papers, have been implemented. If your firm has previously made changes in response feedback papers, it would be useful to test how effective those changes have been.
4. JPF Themed-Visits: The JFSC has now contacted those firms who will have a Jersey Private Fund themed visit this year. Although the JFSC didn't give any details about these visits, they have recently published a short Guidance Note on JPF Annual Compliance Returns. The Guidance Note gives an indication of JFSC expectations in relation to due diligence on service providers and AML/CFT requirements. If these are areas of perceived weakness or uncertainty in connection with JPFs, firms should consider how they measure up against this Guidance Note, especially if they will be subject to a JPF themed visit.
If you have any questions when preparing for a JFSC examination, require advice about responding constructively and effectively post-examination or identify regulatory issues within your business when reviewing past feedback papers, our regulatory experts would be pleased to share their knowledge and experience with you.