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JFSC imposes first civil financial penalty on local firm

Chris Hamblin, Editor, London, 2 August 2019

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The regulator of Jersey's financial sector has imposed a civil penalty of £381,010 on Sanne Fiduciary Services Ltd and has issued a public statement with details of why it felt it necessary to do so.

Martin Moloney, the Jersey Financial Services Commission's drector general, commented: “The penalty would have been significantly greater had it not been for the work of SFSL’s current compliance function, highlighting areas for improvement, and the proactive approach of SFSL’s board and senior management team in promptly acknowledging the shortcomings and making the necessary changes to the business.”

According to the regulator, SFSL failed to "remediate certain issues fully," to the satisfaction of the JFSC in an agreed time frame. It believes this to be a contravention of Principle 3 of its codes. Principle 3 says that a registered person (i.e. a firm) must organise and control its affairs effectively for the proper performance of its business activities.

'Remediation' was necessary because the JFSC uncovered problems during separate reviews it undertook in October 2014 and September 2015, with the board of SFSL agreeing in detail to a comprehensive remediation plan in October 2015. The board said on 1 March 2017 that it had fulfilled the plan.

However, in September 2017, it had emerged that the compliance function had been under-resourced. The board instigated a thorough review which spotted some things that required further remediation. The JFSC embarked on its own investigation. The firm then made the improvements.

When firms 'remediate' things, the JFSC expects them to ensure that:

  • they complete "and verify" tasks to ensure that they have met the requisite standards;
  • the governance structure results in clear accountability and also allows people to spot the areas of business that require investment;
  • the operational structure is organised so that it can embed procedures and assess compliance therewith;
  • risk and compliance functions are adequately funded and resourced, with someone monitoring their efficacy closely;
  • adequate systems and controls are in place to identify and report risks;
  • staff members receive good training and promote a culture of compliance in their offices; and
  • control functions remain appropriate for the scale and nature of the business.

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