JFSC Consultation Paper No. 7 2016 Class O Financial Service Business – Consultation on Consequential Provisions to the Proposed Rewording of the Class O Definition

In July 2012 the JFSC published the Original CP to seek views on proposed changes to legislation under which Industry is regulated.

One of the proposed amendments comprised a change to the description of Class O financial service business as set out in the Schedule to the FSB Order.

The proposed amendment was included in the draft Omnibus Order Annexed to the Original CP, details of which were explained in Section 5.4 of the Original CP.

In summary, the purpose to the rewording of Class O is to clarify the intended Jersey income tax residency requirements of the ultimate clients to whom the services are offered by Class O service providers.

Following such consultation, as set out in the Feedback Paper at Section 3.2, respondents agreed that the proposed new wording achieved the stated objective and generally supported the change. However, as explained in Section 1.2.3 of the Feedback Paper, implementation of the amendment could not be finalised due to subsequent difficulties identified and so the revised definition of Class O was withdrawn from the Omnibus Order pending resolution of those difficulties.

The difficulties in question related to (hereinafter referred to as the “Difficulties”):

• › transitional provisions in respect of existing registrations under the current wording of Class O; and
• › the potential scenario where the service provider, due to an unknown unilateral act of its client that causes the client’s tax status to change, may automatically fall foul of the requirements of Class O and potentially be conducting unauthorised business which have now been resolved through the inclusion of additional provisions.

A copy of the draft Amending Order, setting out the proposed amendment to the wording of Class O is attached as Appendix B.

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