NEWS RELEASE 7 November 2012
FEEDBACK ON POSITION PAPER NO.1 2011 – REVIEW OF FINANCIAL ADVICE
The Commission has today published its Feedback Paper to its consultation on the Review of Financial Advice; the consultation began with the publication by the Commission of its Position Paper in August 2011. The Feedback Paper can be accessed by clicking here.
The Commission’s Review of Financial Advice covers those areas included within the (UK) Financial Services Authority’s “Retail Distribution Review” that were not already adequately covered in Jersey. The Review of Financial Advice thus covers:
- the payment of advisers by way of commission; and
- the required qualifications for financial advisers.
The changes set out in the Feedback Paper are intended to take effect from 1 January 2014 - that is, a year after the corresponding changes take effect in the UK.
An outline of the new regime is set out below. The regime incorporates a new distinction between Professional Clients (as defined in paragraph 2.2.41 of the Feedback Paper) and non-Professional Clients, also called retail clients. This distinction will have a bearing on both the qualification requirements for and the remuneration of financial advisers.
The main features of the new regime are:
- in general, advisers will be required to hold an appropriate qualification at Qualifications and Credit Framework (“QCF”) level 4 or above in order to be able to give financial advice to retail clients (i.e. non-Professional Clients) in or from within Jersey; and
- in general, remuneration by way of commission will not be permitted in respect of advice given to Jersey-resident clients after 31 December 2013.
Even after 31 December 2013, it will not be necessary for an adviser advising Professional Clients, or clients who can be and who opt to be treated as Professional Clients, to hold investment qualifications at QCF level 4 or above. Furthermore, employers of advisers advising such Professional Clients may continue to be remunerated by way of commission for advice given after 31 December 2013. The Commission will be prepared to consider representations as to the achievability of this timescale for the categorisation of existing clients. However, the Commission would expect financial advisers to apply the categorisation for new clients taken on after 31 December 2013.
Overall the position from 1 January 2014 will be:
- the new rules (effectively a prohibition) on commission payments will apply only to non-Professional or retail clients resident in Jersey; and
- the new requirements for qualifications will apply to advice given to non-Professional or retail clients wherever resident.
The definition of “Professional Client” will thus be central to the operation of the businesses of financial advisers and of fundamental importance to clients of those businesses.
- Ends -
For further information please contact: -
Wyn Hughes - Senior Manager - Funds Policy
Jersey Financial Services Commission
Tel: + 44 (0) 1534 822189
Fax: + 44 (0) 1534 822002