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29 March 2018
On January 19 2018 the Jersey Financial Services Commission (JFSC) published its Supervisory Examination Guide. The guide, which is effective immediately, gives a detailed overview of the supervisory examinations conducted by the JFSC. Examinations are a key tool used by the JFSC to detect and deter breaches of regulatory standards and improve compliance.
Although the examination process remains relatively unchanged, there are now key changes to the remediation process for examinations. During the remediation process, the JFSC will no longer issue recommendations and timescales for completion to address any findings. The entity will be responsible for devising a plan detailing how and when any issues will be addressed. A summary of the examination process is set out below.
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 examination 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 from the JFSC. The information request document will contain details of information and documents that the examination team will require ahead of the examination. The examination team will submit the information request six to eight weeks before the start of the examination to allow the entity adequate time to comply with its requirements. After receiving the information request, the entity will have two weeks before the on-site review to respond to the information request.
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 that the requirements of the information 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.
During the desk-based review, the examination team will review the details of the information request 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 onsite 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. Before 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 within 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 receipt of the final examination report to respond to the supervision manger setting out an action plan of how and when any findings will be addressed. On receipt, the supervision manager will consider the appropriateness of the entity's action plan and confirm its acceptability within 10 working days.
For further information on this topic please contact Matthew Shaxson or Cuthbert Francis at Ogier by telephone (+44 1534 514 000) or email (email@example.com or firstname.lastname@example.org). The Ogier website can be accessed at www.ogier.com.
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