Annual Report 2012 - the Jersey Financial Services Commission

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Corporate GovernanceIntroductionThe Commission is committed to high standards ofgovernance and believes that the UK Corporate GovernanceCode (the “Code”) issued by the Financial ReportingCouncil is the appropriate benchmark for financial servicesbusinesses and their regulators. The Code operates on acomply or explain basis where an explanation should begiven about how the underlying principles in the Code aremet where this is not automatic.The Commission complies in full with the Code. Althoughthe Commission does not have shareholders, it has insteada wide range of stakeholders and seeks to have an effectivedialogue with them by way of the annual Business Planand Budget, the Annual Report and the wide range ofconsultation documents about major legislative and policyproposals that it publishes. It also operates a whistleblowing help line to facilitate complaints and has a physicaloffice in a central location to enable the public to makecontact. The Board of Commissioners also meets regularlywith Ministers and with representatives of the Industry toseek feedback.The Commission publishes a section on CorporateGovernance on its Website, which can be accessed atwww.jerseyfsc.org/corporate_governance.asp“The Board of Commissioners alsomeets regularly with Ministers andwith representatives of the Industryto seek feedback.”Constitution of the CommissionThe Commission is a statutory body corporate establishedunder Article 2 of the Financial Services Commission(Jersey) Law 1998 (the “Commission Law”). The governingbody comprises a Board of Commissioners. The Board ofCommissioners is responsible, in particular, for setting thestrategy of the Commission and ensuring that the necessaryfinancial and human resources are in place for theCommission to meet its objectives.Functions of the CommissionThe functions of the Commission are set out in Article 5 ofthe Commission Law which states that the Commissionshall be responsible for:(a) the supervision and development of financial servicesprovided in or from within Jersey;(b) providing the States of Jersey (the “States”), anyMinister of the States or any other public body withreports, advice, assistance and information in relationto any matter connected with financial services;(c) preparing and submitting to the Minister for EconomicDevelopment (the “Minister”) recommendations for theintroduction, amendment or replacement of legislationappertaining to financial services, companies and otherforms of business structure; and(d) such functions in relation to financial services or suchincidental or ancillary matters -(i) as are required or authorised by or under anyenactment; or(ii) as the Government may, by Regulations, transfer.Constitution of the BoardArticle 3(1) of the Commission Law requires the Boardto consist of a Chairman and not less than six otherCommissioners.Currently, the Board consists of a Chairman,a Deputy Chairman and eight other Commissioners.One Commissioner is the Director General of theCommission; all other Commissioners are considered tobe independent non-executive members of the Board.Seven of the Commissioners live in Jersey, and three inthe United Kingdom.Article 3(3) of the Commission Law requires theCommissioners to include:(a) persons with experience of the type of financial servicessupervised by the Commission;(b) regular users on their own account or on behalf of other,or representatives of those users, of financial services ofany kind supervised by the Commission; and(c) individuals representing the public interest.26 | ANNUAL REPORT 2012
The Board is satisfied that its composition provides a properbalance between the interests of persons carrying on thebusiness of financial services, the users of such servicesand the interests of the public at large. The currentmembership of the Board, together with a brief descriptionof their experience, is shown in the chapter entitled“The Commissioners”.The roles of the Chairman and Chief Executive (DirectorGeneral) are split and their respective responsibilities aredistinct. The Chairman is responsible for the running of theBoard’s business and the Director General has executiveresponsibility for the running of the Commission’s day-todaybusiness.The Deputy Chairman of the Board is considered by theBoard to be its “Senior Independent Director” as describedin the Code.Under the provisions of the Commission Law, theappointment of Commissioners is a matter reserved fordecision by the States. When seeking to fill vacancies thatarise, the Board follows the procedures recommended bythe Jersey Appointments Commission (“JAC”) - a body setup by the States to overview all public sector appointments- and a member of the JAC sits on the Selection Panel. TheSelection Panel reports to the Nomination Committee,which considers and, where appropriate, recommends acandidate to the Board. The Board determines whether anappointment should be made and recommends suchappointment to the Minister. If the Minister is satisfied withthe Commission’s recommendation, the Minister will takean appropriate proposition to the States for debate.On appointment, a Commissioner will receive an inductionto the work of the Board and each Division of theCommission. This includes an opportunity to meet seniorstaff in each Division at the earliest stage. Commissionersreceive a standing invitation to attend in-house seminars,as well as receiving lunchtime presentations at strategiclevel from local and overseas speakers of recognized stature.This is in addition to ad hoc continuous developmenttraining events.Under the provisions of the Commission Law,Commissioners are appointed for terms not exceeding fiveyears and, upon expiry of their term of office, are eligiblefor reappointment.Operation of the BoardDuring 2012, the Commission held ten Board meetingsand made two resolutions that were passed by way oftransactions of business without meeting. In advance ofeach meeting, Commissioners are provided withcomprehensive briefing papers on the items underconsideration. The Board is supported by the CommissionSecretary who attends and minutes all meetings ofthe Board.Article 11 of the Commission Law empowers the Board ofCommissioners to delegate any of its powers to theChairman, one or more Commissioners, or an officer of theCommission. However, the Board has decided to retain toitself those powers that could have a highly significant effecton the achievement of its key purposes or on the financesor reputation of the Commission.In particular, in relation to licensing decisions, the Boardhas retained those powers which relate to:• the authorisation of all new business applicants underthe Banking Business (Jersey) Law 1991; and• the refusal of an application or the revocation of apermit, registration, etc., under the four RegulatoryLaws (except in certain limited circumstances,for example where the revocation of a permit,registration or similar is at the request of theregistered person).The Board has adopted a policy statement that sets out indetail which powers the Board has retained to itself and apolicy statement on those powers that it has delegated tothe Executive of the Commission. The full text of thesepolicy statements can be viewed on the Commission’swebsite at: www.jerseyfsc.org/corporate_governance.aspOn an annual basis, the Board holds an Away Day, whichis also attended by the Director General and DivisionalDirectors, that provides an opportunity to discuss strategicissues for the year ahead. Additional meetings to discussstrategic issues and to review the performance of the Board,the Chairman, and the Director General are also held.Annual meetings are held with the financial servicesregulators in the other Crown Dependencies (Guernsey andthe Isle of Man).ANNUAL REPORT 2012 | 27
Page 1: Annual Report2012
Page 5 and 6: Jersey is situated off the north-we
Page 7 and 8: HighlightsPrincipal Themes During 2
Page 9 and 10: Advocate Debbie Prosser (November 2
Page 11 and 12: Chairman’s StatementContinued low
Page 13 and 14: Director General’s ReportOverview
Page 15 and 16: Supervision of individualsAll syste
Page 17 and 18: John HarrisDirector GeneralFUNDSOFF
Page 19 and 20: International Regulatory StandardsI
Page 21 and 22: The Commission continually looks at
Page 23 and 24: Total Examinations 2012Division The
Page 25 and 26: Enforcement case statisticsPercenta
Page 27: ResourcesOne of the aims of the Com
Page 31 and 32: The members of the Audit Committee
Page 33 and 34: Financial StatementsIntroductionFee
Page 35 and 36: INDEPENDENT AUDITORS’ REPORT TO T
Page 37 and 38: Balance Sheet as at 31 December 201
Page 39 and 40: Notes to the financial statements f
Page 45 and 46: Statistical AnnexeCompaniesRegistry
Page 47 and 48: FundsCIFs & COBO Funds - Analysis b
Page 49 and 50: BankingBanks and Bank Deposits - £
Page 51 and 52: Assets of BanksTotals and sub-total
Page 53 and 54: Key trends and profitability of Ban
Page 56: www.jerseyfsc.org

Annual Report 2012 - the Jersey Financial Services Commission

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