TRUST COMPANY BUSINESS

TESTAMENTARY TRUSTEES AND TRUSTEES OF SHARES IN PROPERTY HOLDING COMPANIES * ("the Services")

* As defined in the Financial Services (Trust Company Business (Exemptions No.7)) (Jersey) Order 2001.

This guidance note has been issued for the benefit of Advocates and Solicitors of the Royal Court when registering, as a natural person, to carry on a single class of restricted trust company business (Class L), as a Testamentary Trustee or a Trustee of shares in a property holding company. It has been designed so as to assist with the completion of the application form for registration and with the interpretation of certain provisions in the Codes of Practice and Orders issued under the Financial Services (Jersey) Law 1998 ("the Law").

Article 9 of the Law places a responsibility on the Commission to be satisfied with regard to the integrity, solvency, competence, organisation and structure of an applicant. This degree of satisfaction must be met in all cases before the Commission can issue authorisation.

The applicant should seek to include sufficient information in his application form to address the areas set out in Article 9 of the Law, where necessary by adding free text in the "notes" boxes.

The objective of the Commission is to be satisfied that the reputation of Jersey, and the interests of beneficiaries are protected. Should a person who is providing the Services become incapacitated, or in the event of failure of one sort or another they are no longer able to provide the Services, the Commission would expect there to be a "fail safe" mechanism that could be activated. Examples of such a mechanism are described in more detail below: -

a) Span of Control Top

A natural person wishing to register under the Law must undertake to contact both the Jersey Law Society and the Commission should they become unable to continue to provide the Services; and

must provide to his auditor, on an annual basis, a list of all Trusteeships where he has undertaken to act, or is acting in a manner which would involve him providing the Services.

b) Financial Resources/PII Top

Financial Resources. The Commission would expect to see a statement in the application form that such a person has personal unencumbered net assets at least amounting to £25,000 in addition to a reasonable explanation as to how he plans to address the PII/equivalent liabilities and that the applicant has a track record which demonstrates he has been able to meet his liabilities as they have fallen due e.g. there should be no detrimental financial information on the applicant by way of County Court or Royal Court Judgments, or Petty Debt judgments, other than with explanation the Commission considers reasonable in the light of the circumstances.

Professional Indemnity Insurance. A provider of the Services should confirm to the Commission how the financial implications of his personal liability to the company/creditors/customers are to be met, e.g. by his own PII cover, company policy or policy of any fully registered trust company business with which he may have entered into an arrangement.

Where such a person providing the Services meets PII needs personally, the Commission would accept a level of PII cover calculated on the same basis as stated in the Codes of Practice, but with a minimum cover reduced to £1m.

c) Competence Top

The person providing the Services must be a member of the Jersey Law Society and be able to demonstrate to the Commission, through his application form, that he has attained a relevant level of experience in estate practice.

Additionally, the Commission would expect a person providing the Services to demonstrate, through CPD records, that he keeps sufficiently up to date in the execution of his estate practice duties to meet the objectives of the CPD requirements as set out in the Codes. The Commission accepts that, as this is a small element of the service providers business, the full twenty-five hour requirement is likely to be excessive.

d) Audit Top

The Service provider shall ensure that the trust assets under his control comply with Article 20 of the Law, that an auditor is appointed within the provisions of Articles 17 & 18 of the Law and that said auditor carries out an audit of customer monies held under the control of the service provider.

The objective of this requirement is to recognise the auditing work already carried out under the Law Society rules for client accounts (which currently specifically excludes trust assets) and extend the Law's audit requirement only to trust company assets.

The Commission would expect the same auditor to carry out the audit for both the Law Society and the Law's purposes and that the auditor provide a declaration to the Commission in accordance with the Financial Services (Trust Company Business (Accounts, Audits and Reports))(Jersey) Order 2000.

Queries to: the Trust Company Business Division. Telephone: 822000.

30th January 2002

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