News and Insights

A 2022 judgment of the Jersey Employment & Discrimination Tribunal ends:

“In this case, a professional has lost his livelihood at the latter end of his career as a result of falling short of the scrupulous attention to the processes of protection against money laundering which employers, the law and the well-being of the Island demands of all those in positions such as his. It is a sad but cautionary story.”

Compliance with regulation and ethical behaviour go to the core of senior roles in financial services. The junction between regulation and employment law is an interesting one.  

Financial services regulation

In Jersey, financial services businesses, and key roles within them, are regulated by or registered with the Jersey Financial Services Comississon (JFSC) and are subject to the Financial Services (Jersey) Law 1998 (FSJL). Such businesses must operate in accordance with the Code of Practice applicable to the services they offer, including by meeting the requirements of Article 9 of the FSJL: the “fit and proper” assessment. This test requires registered persons, principal persons and key persons to comply with certain standards in respect of integrity, competence, financial standing, structure and organisation.

One would hope that all professional services providers operate with integrity and competence. When it comes to trust companies, insurers, funds service providers and banks this is of particular importance. This is fair enough, considering that those at the coalface are entrusted with the assets of their clients, who come to Jersey because good regulation should ensure good management of assets. The island has a stable political system, an independent judiciary, great connectivity, competitive tax rules and a raft of quality service providers, from accountancy to cyber-security. But robust regulation is surely the clinching argument for those who will be handing over their savings for investment.

Integrity and competence

The case of Francis v JFSC [2018(1) JLR 106] followed the decision of the JFSC to issue a public statement about the former CEO of Horizon Trust (Horizon), David Francis. The JFSC public statement said:

“An investigation into the fitness and propriety of Mr Francis, in his capacity as a principal person and a former director of Horizon, has taken place and the JFSC has concluded that…Mr Francis acted with a most serious lack of integrity and his displayed level of incompetence was of the most serious kind.”

Francis appealed to the Royal Court, which found against him but recommended that public guidance should be issued making it clear that a finding of lack of integrity was not the same as a finding of dishonesty.  

The public guidance was issued in 2018. It made reference to various sources, noting among other things that:

“Integrity connotes moral soundness, rectitude and steady adherence to an ethical code…

Lack of integrity and dishonesty are not synonymous. A person may lack integrity even though not established as being dishonest.”

The guidance provided a non-exhaustive list of examples of behaviour indicating a lack of integrity such as:

• Turning a blind eye to matters that should raise obvious concern or cause enquiry.
• Preferring personal interests above those of the customer.
• Making statements to others on which they will or may rely with reckless disregard as to whether they are true.
• Failing to comply with the law, regulatory requirements and professional standards expected.

On competence the guidance included requirements that a registered business must:

• Ensure that its directors, partners, senior managers and all other employees are fit and proper for their roles.
• Assess and monitor the working practices, competence and probity of its directors, partners, senior managers and other employees.

Employment and financial services regulation

The guidance on integrity and competence issued by the JFSC makes it plain that not only must key individuals be technically qualified and experienced, they must also comply with the ethical standards required by the courts and regulators. This aspect of work in the financial services industry is increasingly seen as a pivotal aspect of senior roles.

In 2024 Jersey had an overwhelmingly positive MONEYVAL review but it is clear that the JFSC will continue to scrutinise the industry closely.  Among other things, no financial service business can be considered truly trustworthy if it is unstable. The need for stability is managed through measures including the requirement on regulated businesses to maintain an Adjusted Net Liquid Assets (ANLA) position as mandated by the JFSC.  When coupled with the requirements of the Code it helps to ensure that the island has:

• Steady service providers.
• Run by ethical and responsible people.

Employers in the industry need to manage their organisations and their staff in a way which ensures that the required standards are met.

Appropriate steps include clear contractual terms and/or policies on:

• Confidentiality and data protection, to protect the private information of and about clients, as such information is highly sensitive and private to the clients, while also being a business asset;
• Personal financial integrity and transparency, including around perks and gifts;
• Acknowledgement of and compliance with other individual personal obligations, such as CPD requirements;
• Management and supervision.

Restrictive covenants to protect business stability

When changing jobs, people in positions of influence over clients may be prevented from encouraging clients to move with them. This is so that businesses are not destabilised by smooth talkers who deploy their clientele as a bargaining chip, as they move around looking for ever larger bonuses. Clients, looked at in the round, must come first. 

The protection of clients may necessitate restricting the ability of individuals to work where and how they wish, even if in some cases this may mean putting limits or parameters around an adviser’s ability to work with specified clients for a period of time. This is not about being anti-competitive so much as being pro stability.

We have moved away from the days of long lunches, where charm and money kept the coffers topped up. Integrity is the name of the game, both in regulation and employment law.

Viberts is a full service Jersey law firm, with extensive experience in regulatory and employment matters. Advocate Beverley Lacey, Dispute Resolution Partner, represented the JFSC in Francis v JFSC.

Advocate Vicky Milner, Employment Partner, represents clients including senior executives and businesses in the financial services industry.