Many financial advisers and other regulated entities spend much time focusing on regulatory risk.  However and as is highlighted in the JEP articles (below) the lawyers are also getting in on the case.

Along with the introduction of the Channel Islands Ombudsman (http://bit.ly/2byVh7m), life is getting very tricky for those who have a gap in their Governance, Risk and Compliance [GRC] framework.

LEGAL RISK = Mis-selling risk, cross-border risk and other related risks.

Firms should pay particular attention to the pre-contractual discussions that take place with customers, how the content of those conversations ARE RECORDED and which individuals and entities within a corporate group organisation are responsible for them.

Particular care will be needed where the law of another jurisdiction may be relevant.  For example, where there may be scope for confusion as to agent and principal roles and where complex contractual relationships are intended for example:

• Where the firm is intended to act on an “execution-only” basis, and investment advice is provided from another group entity.

Firms should ensure that appropriate legal advice, and clear guidance and training on relevant legal risks (including the potential impact of changes in the law in other relevant jurisdictions), are available to your management and other personnel.

Where practical, steps should be taken intra-group to ensure that firms are not exposed to legal risks as a result of acts or omissions of individuals in other parts of a group structure outside of your jurisdiction (Jersey/Guernsey).