Virtual examinations follow up questions
Following our virtual examinations webinar on Wednesday 17 June with our Director of Supervision, Jill Britton, and our Head of Examinations, Amanda Reilly, we have collated the attendee questions that we did not have time to respond to during the session.
Frequency of examinations
How long do you think you will be doing virtual examinations once we reach the final stages of the lockdown exit strategy?
We have no immediate plans to be physically on-site and we will not rush back. We will be driven by the Government’s decisions and will consider this only when social distancing requirements are no longer in force. We are keeping this under review.
Are we likely to have more than one exam in a year?
It is possible that a business could be subject to more than one examination during a 12-month period, particularly where the business comprises multiple entities that carry on different kinds of financial services business. We are however conscious of the impact that examinations can have on a business and will try, where possible, to consider the timing in between visits where there is more than one in a year.
You mentioned that you have planned through to Q1/Q2 2021 - have those firms involved already been notified?
We have planned through to early 2021 for the Financial Crime Examination Unit however planning continues for Entity and Thematic Examinations to be undertaken by the Supervision Examination Unit. To date, some of the firms have been notified, but not all. We will follow our published methodology and timetable to notify these businesses that are subject to examinations.
Structure of examinations
Given the length and nature of the interviews now undertaken, shouldn't the JFSC offer the interviewee the opportunity of obtaining legal advice?
The length and scope of interviews undertaken as part of examinations have not significantly changed in recent years. Examinations form part of our overall supervisory approach and therefore we do not believe that it is necessary for interviewees to obtain legal advice.
Have you modified your on-site examination procedures, since you are no longer on-site?
The examination stages remain the same in terms of planning, reviewing, fieldwork and reporting.
The only change we have made are not conducting face-to-face interviews and increasing the amount of time we give businesses to provide us with requested information. We are also giving extra time for internal reviews and conducting fieldwork (the virtual on-site element), as well as longer reporting and response timeframes.
How does the visit programme fit with the JFSC risk model? Does this inform who is visited? Does intelligence also play a part?
Yes, the risk model does support how we select businesses for regulatory examinations. Intelligence, the supervisory risk data collected as part of the National Risk Assessment, and other information that you submit also play a part in our selection.
You mention in the guidance that you may interview more junior members of staff who can have a senior staff member in the interview who will have to leave before the end, why is that?
We do this to provide the employee with the opportunity to ask the examination team questions or to provide further detail, which they may not feel comfortable doing in the presence of another employee.
Pros and cons of remote examinations
Have you found it harder to identify and prove findings as a result of the remote working arrangements? What has been the hardest part of virtual/remote examinations?
We have a robust process in place for conducting examinations and we will continue to ask questions and seek supporting information until we can establish how businesses are complying with their regulatory requirements and managing their risks.
One of the challenges we are conscious of is our ability to undertake file reviews. File reviews continue to be part of our assessment, however this is on a reduced sample size. We may follow this up with businesses when we are able to go back on-site and undertake additional files reviews.
Do you have any concerns or experiences that the nonverbal communication that can be observed during an interview is lost if only having a head shot video interview?
Whilst face-to-face interviews will always be our preference, the use of technology to conduct these discussions remotely has proven to be an effective alternative.
Technology and security
If the registered business has to comply with a group policy barring the use of Zoom, are alternate VC systems available?
We are happy to work with businesses to find a solution that works best for both parties. Although Zoom is our preferred video system, we are also open to using other systems, such as WebEx.
Would it not make more sense to record interviews with staff using the functionality on Zoom rather than using a note taker? Individuals can be subjective in their interpretation and use short hand that dilutes or can misrepresent comments made, while a recording cannot be disputed.
We are being consistent with our normal procedures by using a note taker. At this time, we are not recording the sessions.
How does the JFSC manage security of data on laptops at the examiners homes? What protocols are being applied to avoid other people reading material?
We take data security very seriously, working closely with our IT department to ensure the data we are dealing with is secure and protected.
We have developed the myJFSC portal with security measures to ensure the confidentiality and integrity of data. These security measures have been reviewed and tested by external providers who have significant experience dealing with the security of highly sensitive information.
Our IT team has reviewed the security of Zoom and how we could deal with any concerns raised by businesses. All of our meetings are password protected and we can lock the meetings once they start. We are following all best practice guidelines.
How long will uploaded client information be retained by the examination team?
Plans for the future
Are there efficiencies and benefits of the remote examinations process that you would look to continue post lockdown/ social distancing?
We are keeping this under review. We are always looking for ways to improve the efficiency of the examination process and believe that there may well be benefits to using some of the tools and processes we have used in recent weeks going forwards.
Are there long-term plans to keep virtual examinations as part of your tool-kit?
We are consistently looking at how we can do things differently, particularly where we can streamline processes and make it easier for us to get the answers we are looking for. We are now aware of what can be achieved virtually, so how we engage going forward will most likely be different.
Given everyone seems to be doing just fine working remotely, what are the chances of the JFSC relaxing the requirement for compliance roles to be based in Jersey, especially seeing as you are finding that remote working doesn't impact your examination programme?
The examination programme is only one part of our overall supervisory approach. At this stage we have no plans to change the requirement for key person roles to be Jersey-based.
Are businesses likely to allow staff to return later than advised by Government policy? Hopefully, the JFSC can be flexible in arrangements and work with us to make regulatory visits work?
We appreciate that businesses may not return to their offices in line with the Government policy. We also appreciate that some businesses are also considering their flexible working policy as a result of the recent arrangements and therefore we will continue to be flexible in our position.
A while back, industry was told each license holder would be given a 'financial Crime' risk rating and they would be told what its risk rating was. What is the status on that?
Our risk model is continuing to evolve. It remains our objective to engage with businesses on their financial crime risk rating, however this needs to be at the right time.
On the factual accuracy part of the report process, why does the JFSC issue at the same time its conclusions? These conclusions being made before the accuracy of the report being agreed?
We believe that it is important that the regulated business has the opportunity to assess the examination team’s draft conclusions as part of the factual accuracy report to ensure a “no surprises” policy and to assist in understanding the examination team’s findings. Of course, if there are factual inaccuracies highlighted within the draft report, this may change both the findings and conclusions of the examination team. Where this is the case and findings and conclusions change materially, we usually provide the business with an amended report for a further factual accuracy review prior to issuing the final examination report.
Do you have a specific date in mind for the publication of the examination findings mentioned?
We have published a feedback paper on the findings from the initial round of financial crime examinations and we would encourage Industry to review this paper and conduct a ‘compare and contrast’ exercise for their own businesses.
For thematic examinations undertaken year to date, we are in the process of finalising reports. We plan to issue a feedback paper on our Reliance thematic this month and our Compliance Monitoring thematic in September. Both papers will be followed by webinars to provide an opportunity for questions to be asked.
Is the JFSC using the National Risk Assessment data to influence its examination enquiries?
Yes the data is one of the sources of information that we used to prioritise our supervisory activities.