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Vision from the top: Chair's statement
At the time of writing my first statement as Chair of the Jersey Financial Services Commission (JFSC), local and international financial services centres and communities across the world are experiencing unprecedented pressures as every one of us contends with the outbreak of the coronavirus, Covid-19.
For Jersey and our regulated community, the pandemic has posed its own unique challenges as many organisations, including our own, have been forced to move to home working for an indefinite period. While this has presented considerable operational issues for all, I have been immensely impressed by the way in which the JFSC has responded to the threat, ensuring that business as usual continues, albeit remotely.
The far-reaching consequences of this pandemic for the Island and Industry are yet to be fully determined, but I am confident that the organisation will weather this storm, as it has many others. In fact, one of our strategic goals for 2020 and beyond is to strengthen our medium-term organisational resilience. Nothing better illustrates our resilience than the positive way in which we have reacted and adapted to this global crisis.
A tough act to follow
It would be remiss of me to start my tenure as Chair without thanking my predecessor, Lord Eatwell. John has been a distinguished Commissioner and Chair. He has helped guide the JFSC through difficult times and led its response to the changing regulatory environment in which Jersey, its businesses and its regulator operate. His thoughtful and engaging approach strengthened the JFSC’s relationship with the businesses we regulate, as well as the Government and its agencies. He is a tough act to follow.
A clear but difficult mandate
When I joined the JFSC, I was struck by the very clear mandate given to us by the guiding principles in the Commission Law. These principles drive the JFSC. They motivate our people to work on your behalf.
- In supervision, we seek to reduce conduct and prudential risk as we authorise and supervise firms
- In Registry, we seek to protect the Island’s reputation when we check the beneficial ownership and business purpose of firms seeking to set up in Jersey
- As an organisation, we seek to support innovation in financial services to keep pace with changes in technology, whilst at the same time protecting the public
- Where firms let down their customers through incompetence or malpractice, we will take enforcement action where appropriate
- Through our effective supervision we are able to protect the Island’s reputation and promote the best economic interests of Jersey
- Whether through supervision, registry or enforcement activities we aim to play our part in countering financial crime.
This is a challenging mandate to deliver. Made more challenging by the environment in which we operate.
There is continued focus on the role of International Financial Centres such as Jersey. As an Island, we understand the importance of adhering to the highest international standards to safeguard our reputation. Those standards though are dynamic, not static. We, therefore, need to evolve as a regulator in order to meet those new higher standards.
As a consequence, we are working closely with the Government of Jersey and the financial services industry to prepare for the next MONEYVAL assessment scheduled for 2022. However, we know that the bar for achieving the gold standard is much higher than the last assessment in 2015.
The businesses we regulate are changing too. They are becoming more complex, driven by technology, globalisation and innovation. Their response to Covid-19 is evidence of this. A decade ago, the Island’s financial services businesses would not have had the technology to relocate their operations from offices to remote working. Globalisation means not just international businesses, but also hand in hand with technology, more complex supply chains and outsourcing.
Prior to the current crisis, as a regulator we were placing more emphasis on our own and the sector’s operational resilience. Through our registry and regulatory functions, we see also the opportunities and challenges that come from innovation. It is undoubtedly the case that Jersey will only thrive through innovation but, as we note elsewhere in our annual report, that cannot come at the expense of consumer protection. At the JFSC, we need to focus our resources to enable us to continue to deliver our mandate against this backdrop.
A changing international landscape
When I spoke at the launch of our 2020 Business Plan earlier this year, I put our strategy in the context of a changing international landscape. I made the point that the consensus after the financial crisis around global regulatory coherence was fraying. As the trade in goods becomes more protectionist, then the rules that govern it become more fragmented. It is in Jersey’s interests for this not to be repeated in financial services. Global regulatory coherence serves us well. Clearly, Brexit unsettles the international framework in which we operate. We do not know at this point what will be the long-term consequences of Brexit, but we do need to remain close to both the UK and EU and continue to promote a strong consensus around international standards. During 2019, we supervised closely Industry plans for a disruptive Brexit scenario, which did not emerge. We will continue to support the Government of Jersey in its international discussions on the implications of Brexit.
It was against this challenging backdrop in 2019 that we set ourselves three strategic goals: to build even more effective supervision; to embed risk-focused choices throughout our work; and to strengthen our organisational resilience.
Whilst our three strategic goals look to the future, as our report on our activities in 2019 show, they are being embedded in the JFSC. Our activities are grouped in five themes; looking at supervision, protecting the public, understanding risk, building regulatory and registry standards and better processes.
Underpinning this are our people.
Making a difference
The JFSC has a demanding workload and rightly so. Together with the Government and businesses, we play a key role in maintaining and enhancing the prosperity and reputation of the Island. As I have got to know the team at the JFSC over the past year, I have been impressed by their dedication and their commitment. Throughout the organisation, everyone has a passion for their work because they know the difference they make to the Island.
I started by thanking my predecessor for his contribution to shaping the JFSC and I want to end by thanking our people. They, too, have made the JFSC the strong and effective regulator it is today. But we are not complacent. We have an ambitious agenda for 2020.