Following the JFSC’s publication of its Feedback on its Consultation Paper on Civil Penalties in April 2013 (the “Feedback”), key points to note are as follows.

1. It seems certain that civil penalties for breaches of codes of practice will be introduced in Jersey. They are established in the UK and available to the Guernsey Financial Services Commission (the GFSC). So far the GFSC appears to have used the power to fine in only one case, but in a recently published consultation paper the GFSC is considering increasing the size of fines from the current £200,000 to a new maximum of £5 million for firms and £1 million for individuals.

2. The JFSC has rejected the idea (based on the need for a separation of powers) that there should be a separate tribunal akin to the Regulatory Decisions Committee in the UK to deal with civil penalties on the basis that the current structure has worked well
and there is an existing appeals procedure to the Royal Court.

3. As regards appeals, the legal test on an appeal against a civil penalty will be the same as the test for appeals against other enforcement decisions such as issuing a public statement – ie that the decision is unreasonable having regard to all the circumstances of the case.  The grounds for an appeal encompass both the procedural fairness by which the decision was reached (the Feedback envisages that the JFSC’s existing Decision Making Process procedure will also apply to civil penalties) as well the nature of the decision itself.

industry should be aware that the legal test is a high threshold to get over in order for an appeal to be successful based on previous decisions of the Royal Court in relation to appeals against decisions of the JFSC.
This reinforces the need for businesses to get their compliance procedures right first time rather than assuming that the appeal route will provide a way of avoiding a civil penalty.

4. The JFSC envisages using public statements in conjunction with civil penalties save for “minor” breaches which are resolved.

5. There is still work to be done by the JFSC on the amounts of the civil penalties and the distinctions between the three bands of seriousness. Whilst the formal consultation process has closed enquiries or comments concerning civil penalties can still be
raised.