Frequently Asked Questions (FAQs)
The Commission is not able to recommend banks to prospective customers but it is hoped that the questions and answers shown below will provide guidance to depositors in their deliberations.
Q1: Does Jersey have a depositor-protection scheme?
Yes. This is largely in line with similar schemes in place in the UK, Guernsey and the Isle of Man. The main feature of the scheme is that personal depositors are covered for 100% of the first £50,000 of their savings with any one banking group. However, there are certain limitations applicable, including that the total payout is limited to £100 million in any five year period. Full details can be viewed by clicking here.
Q2: What conditions do banks need to meet to operate in Jersey? What banks are permitted to operate in the Island?
Jersey has developed a comprehensive licensing policy for its banks. This was last reviewed and updated in September 2014 and is published on the Commission’s website. The Banking Business Licensing Policy can be found under the heading Specific to Banking Business by clicking here.
The policy reflects the long established conservative approach that the Island has adopted towards banks operating within it.
Whilst the policy offers some level of flexibility, its core tenets are that banks should:
- be members of the Top 1,000 banks in the world, measured by Tier 1 capital size;
- have no dominant controllers;
- commit to supporting their Jersey businesses;
- meet the financial standards laid down by the Commission; and
- be adequately experienced and competent in relevant areas of banking.
The Commission applies financial requirements to those banks that are incorporated in Jersey (as opposed to branches – see Q13). These are in line with international standards and are designed to ensure that Jersey’s banks remain well capitalised, with good liquidity levels at all times.
Other specific licence conditions are established with individual banks to reflect their particular circumstances. These can include such things as higher capital requirements and limitations on activities or types of customer that a bank can deal with.
Q3: What does the Commission do in supervising its banks and how well does it do it?
There are four key areas of activity involved in supervising banks, these are:-
The Commission’s supervisory approach and performance were assessed by the International Monetary Fund in late 2008 and were found to be compliant, or largely compliant, with current international standards in all relevant areas. The specific gradings received put Jersey in the very top echelon of the world’s regulators.
- the development of regulatory requirements e.g. laws and codes of practice;
- on-site examinations and meetings with banks;
- off-site supervision e.g. analysing financial information; and
- international liaison e.g. dialogue with other regulators that supervise banking groups represented in Jersey.
Q4: What can I do if I have a complaint against a bank?
The Commission has issued a guidance note on consumer complaints, which can viewed by clicking here.
Q5: I would like to open a bank account in Jersey - can you recommend a bank?
The Commission is unable to recommend a particular bank. However, please click here to access a full list of banks regulated by the Commission.
Q6: I have recently arrived in the Island to take up a new position, or I am here on a temporary basis, and I am having difficulty in
opening a bank account. Can you assist in any way?
The Commission is unable to assist in the opening of a banking relationship or recommend a preferred provider. Banks retain the right to accept or decline business at their own discretion.
However, in order to smooth the process of opening an account, it would be useful for you to have as much information available as possible before approaching your chosen bank. Examples of the type of information that may be required are; identification, proof of address and details of previous or existing banking relationships. You may also be asked to provide three months’ bank statements or a letter from your employer confirming your employment and salary details.
Some employers make arrangements with their own banks to set up staff accounts so it is worth checking with your employer to see if they have made such an arrangement. An introduction by your employer may also help if they are providing your accommodation and you have not yet received any utility bills in your own name.
Q7: I have been turned down for a business loan, personal overdraft or other credit facility by a Jersey registered bank and feel that the decision is wrong. Can the Commission help?
The Commission does not regulate commercial decisions taken by banks in relation to the granting of credit facilities. You may wish to approach the declining bank directly with further information in support of your request or, alternatively, approach other banks which might be more receptive to your request.
It might be worthwhile checking that your credit history is recorded correctly with credit reference agencies, because incorrect credit information could affect a lender’s decision. The Jersey Citizens Advice Bureau has a helpful guidance note on how to check your credit history. It can be found on their website at http://www.cab.org.je
Further information on matters that lenders’ take into account when considering loan proposals is detailed in the Code of Practice for Consumer Lending, which can be viewed by clicking here.
Q8: If I am not sure if a banking activity needs authorisation from the Commission can I ask you for advice?
Banks are regulated under the provisions of the Banking Business (Jersey) Law 1991 and Commission staff will be happy to provide general explanations of what activities that Law covers. However, Commission staff cannot provide legal advice in respect of specific circumstances and, depending on what these are, you may need to seek advice from a lawyer qualified in Jersey law.
Q9: What safeguards do I have when placing my money with a bank operating in Jersey?
The Commission considers that significant comfort can be derived from:-
- the high quality of banks operating in Jersey (see Q2);
- the strong regulatory requirements and supervisory oversight applied by the Commission to Jersey banks (see Q3);
- the absence of bank failures or depositor losses; and
- the availability of a depositor compensation scheme (see Q1).
However, there can be no certainty that any one banking group will not fail, a fact that became more apparent during the global financial crisis seen in recent years. There is no ultimate safeguard and depositors are advised to review and consider all sources of information available to them on any bank that they are considering depositing money with (see Q14).
Q10: How can I find out if a bank is regulated by you?
The Commission’s website lists all regulated banks. On the home page, select the “Banking” tab and click on the “Regulated Entities” box or click here to go direct to the relevant page. If the bank you are looking for does not appear on the list but is advertising itself as being registered in Jersey, please let us know as it might represent some form of fraudulent activity.
Q11: What do Jersey banks do?
Almost all banks, in their deposit-taking activities, are involved in maturity transformation and credit intermediation. These involve accepting deposits from customers, often on a short term basis, and lending those monies to other customers, often for quite long periods such as with mortgages. This process is essential for an economy to function adequately.
Jersey banks operate in a similar way but, because they are based in a highly active but geographically quite small international finance centre, the level of deposits they receive far outweighs the borrowing needs of local customers. They therefore lend the majority of their deposits to parent banks or group companies. In doing so, they act as valuable suppliers of funding to mainland banks and, in turn, this creates lending books of relatively low risk in Jersey.
Q12: Has a bank in Jersey ever failed?
No Jersey bank has failed since the 1970’s.
Q13: What are the fundamental differences between a bank that is incorporated in Jersey and one that operates in Jersey as the branch of a bank incorporated elsewhere? Are they regulated differently?
A member of the public will rarely have cause to be aware of the status of a bank in this respect when dealing with it. A bank’s status as a branch is not always immediately apparent from its name but this will be the case where its name ends in, for example, “plc” or includes the name of its home jurisdiction in its title, for example “IOM”.
In the case of a branch, the Commission normally relies upon the overseas regulator in the country where the bank has its head office to undertake supervision of the bank’s financial strength. This is normal international practice and reflects the practical difficulty of separating the financial affairs of a branch from the wider legal body of which it is a part. In such cases, to gauge the safety of placing funds with the Jersey branch, depositors are well advised to review information available on the legal entity. That company’s website, and that of its home regulator, are good places to start in this respect. More generally, comfort can be gained from the high entry requirements applied to banks wanting to operate in Jersey (see Q3) and the existence of a depositor compensation scheme (see Q1).
In the case of banks that are Jersey companies, the JFSC seeks to ensure that at all times banks are sufficiently protected from failure. Basel II was adopted in Jersey, in line with the EU and other jurisdictions, in January 2008. In addition to setting standardised rules across all banks, the JFSC analyses each bank’s full risk profile and, where necessary, requires banks to address these risks (for example, by raising capital).
The international standard has seen several revisions since the financial crisis, known collectively as Basel III. The JFSC has implemented fully the changes that ensure (1) capital is of high quality, and (2) banks can meet customer withdrawals in any future crisis. Outstanding elements will be addressed by 2022, the deadline for adoption of the revised standardised rules for assessing how much capital is required as standard to safeguard against loan losses (credit risk), the most important risk faced by banks.
In cases of crisis, the Commission would be better able to ring fence the assets of a Jersey company in order to protect its depositors than it would be able to in the case of a branch. A greater reliance on the actions of the home regulator therefore occurs in the latter case. However, activity and inter-dependence between Jersey incorporated banks and their parents is very high in most cases and it would be difficult to separate the fortunes of one from the other.
Q14: What should I take into account when considering placing a deposit with a bank with which I have not previously dealt?
What information sources are available to me?
A depositor will clearly wish to consider matters such as quality of service, pricing, delivery channels, convenience and the overall relationship they have with a bank. These matters are very broad in scope and the Commission would generally not consider them, except where there is evidence of a bank not:
- complying with the deposit advertising conditions established in Schedule 1 to the Banking Business (General Provisions) (Jersey) Order 2002; or
- adhering to the disclosure and advertising requirements of sections four and seven of the Banking Codes of Practice for Deposit-taking Business, which can be viewed by clicking here.
The deposit advertising conditions include requirements that deposit advertisements specify the name and address of the bank and the interest rate(s) payable in respect of deposits. They also require that where references are made to protection or to the size of the parent, these statements must contain specific supporting information.
Comments herein are confined to matters that will help a depositor to consider the safety of his or her money (see also Q1 reference Jersey’s depositor compensation scheme).
As a general guide, consumers should be aware that historical evidence worldwide demonstrates that terms offered which are very materially more generous than the market average can be reflective of a bank that is in financial difficulty.
Relevant primary information differs between banks that are incorporated in Jersey and branches of banks that are incorporated elsewhere (see Q13). In the case of a branch, depositors need to consider the standing of the legal entity as a whole and may wish to consider the financial information that it publishes. In many cases, that entity is part of a wider group and similar considerations of the group/ultimate parent will also be relevant.
Such consideration of the group/ultimate parent bank will also be relevant when considering the standing of a bank incorporated in Jersey but, in addition, such banks also produce financial information relating to the Jersey company alone.
Turning first to considerations in respect of an organisation that has a banking branch in Jersey, a banking group or ultimate parent bank, relevant information sources are:
- Annual financial accounts – these provide a comprehensive description of the company’s financial performance for the previous year and its financial strengths and commitments at the year end. They can be accessed via the company’s website or viewed at the Jersey bank’s premises;
- Interim reports – these provide similar but more limited information to that seen in annual accounts and can be accessed on the company’s website. They usually represent the most recent published financial information available;
- Company’s website – wider news about the bank and its activities, ownership and geographical spread can also be accessed via its website;
- Media – for latest news, both specific to individual banks and the broader economy, financial trends and advice on managing your money, all forms of media, but particularly the financial press and websites focused on finance, provide a huge range and quantity of information that can help to form a balanced view. This will include market information, such as the share price;
- For those who register with them, credit rating agencies provide assessments of individual banks for both the short and longer term outlook, together with detailed reports that are typically made available on a subscription basis. The Commission permits banks incorporated in Jersey to use Fitch, Standard & Poor’s and Moody’s for capital adequacy calculation purposes.
Where available, the Commission considers that rating agency reports are a valuable source of up-to-date analysis;
- Home regulator websites – this will give information on the regulatory regime applicable to the bank, possibly also news of
any relevant current economic circumstances and related developments plus cross references to other information sources;
- FATF/IMF/OECD websites – these provide information and commentary on individual countries, including the results of their own assessment exercises, which can provide an indication of the quality of financial regulation applied in home jurisdictions; and
- The Commission’s website www.jerseyfsc.org – this provides broader information on Jersey’s regulatory regime, including details of public statements issued, such as warnings against scam banks, and a list of all banks registered to accept deposits in the Island. Cross references to relevant legislation are also provided.
The above commentary applies equally to banks incorporated in Jersey but, in addition, they are required, under Article 32 of the Banking Business (Jersey) Law 1991, to produce and make available on their premises their latest annual audited company accounts.