Vision from the top: Chair's statement

2020 has been an extraordinary year. The Island, its people and its businesses have been deeply affected by Covid-19. The pandemic has impacted each one of us and, whilst restrictions are being eased, the clock cannot be turned back: our lives have been indelibly marked by the events of the last year.

I am very grateful to the team at the JFSC, ably led by our Director General, for their work maintaining the continuity of our operations, our engagement with businesses and our support to the local community. It is much appreciated.

One of the JFSC’s guiding principles is to contribute to the long-term economic wellbeing of the Island. For me, this means we need to understand the technological, business and regulatory changes that will shape the Island’s future: balancing facilitating change with maintaining high but proportionate regulatory and supervisory standards. Whilst Covid-19 dominated 2020 and will cast a long shadow, we know that the pace of change in financial services is accelerating and we need to respond.

Our seamless move

As with the firms we regulate, we found that previous investment in technology facilitated a high degree of operational resilience during the pandemic. Our seamless move from our offices to our homes ensured that users continued to access the Registry and its services, and this was seen as an asset by Island businesses.

Whilst the pandemic might have given us cause to pause our IT development, we decided to continue our planned investment in technology to improve the resilience and functionality of our systems. Firms need to be able to set up new schemes and structures efficiently to compete with other jurisdictions. Our multi-million pound investment into myRegistry and myJSFC support this. We believe that the modernisation of the Registry will help users update their own systems and processes. Our investment in technology
removes barriers to change and can catalyse new investment by users. If it is easier for you to do business with us, then it is easier for you to do business with your clients.

The adoption of remote working not only creates new opportunities for business, but also presents regulatory challenges. Increased flexible working in the Island will change how business is done. So how do you demonstrate that controls continue to work effectively, regardless of whether people are in the office or at home? The operational resilience of firms across multiple geographies will increase the opportunity for the centralisation of functions, increasing specialisation and decreasing costs. The JFSC will work with businesses to understand the governance and risk management of new material outsourcing arrangements and the growing use of the Cloud.

Of course, technological disruption is not just about changes to existing businesses. We work closely with Digital Jersey and Jersey Finance to support innovative new businesses. In fact, in 2020 our innovation hub helped 74 businesses with their queries about how to develop innovation in financial services and how regulation applies to them. This was almost a quarter more enquiries than we received in 2019 and mainly related to RegTech.

As another part of our contribution to the economic wellbeing of the Island, we need to demonstrate that, through proportionate and effective regulation and supervision, financial services firms and their customers can be confident about doing business in Jersey.

Supervision, remediation and enforcement action can be challenging for businesses, but they are necessary. Whilst Covid-19 reduced the number of examinations we undertook in 2020, our investment in risk-based assessment to underpin the deployment of resources ensured our visits were carefully targeted. We expect to increase the number of examinations in 2021, reflecting the investment we have made in our Supervision team.

Where we identify failings that put customers at risk or create opportunities for financial crime, we will take action. It is not in the interest of those who abide by the rules for Jersey to be seen as a soft touch by those who do not. One of my reflections on the outcome of our work this year is the pivotal role of Boards. Responsibility for compliance failings and poor systems and controls sit with Boards. We will continue to highlight examples of good and poor governance in our work.

It is inevitable that any review of 2020 must include reference to the Island’s preparations for MONEYVAL. Whilst Covid-19 has delayed our assessment, that is no reason for complacency. We continue to invest in people and processes, as well as working with the Government on the National Risk Assessment and legislative changes to ensure we have the most effective regime possible. 2021 will see this work continue and, to assess our own readiness, we have commissioned an external review of our work. We see a good outcome from the MONEYVAL assessment as pivotal to the Island’s wellbeing.

The accelerated adoption of technology through the crisis has changed how we interact with firms. My own Industry engagement with trade associations and firms has been by Zoom. We have held a number of webinars to flag issues to firms and the launch of our business plan for 2021 was virtual, dramatically increasing the numbers who were able to attend. We will continue this approach. Deeper engagement with Industry will help us to better understand the challenges businesses face and how we adapt to them, and at the same time be clear on our expectations about the behaviour of firms and their people. Outreach is also one of the tools we will use to raise the standard of compliance on the Island.

I can summarise these strands as building Jersey’s reputation. Robust and resilient operations, facilitation of technological evolution, proportionate and effective supervision, and strong Industry engagement all help to build our reputation as a jurisdiction. The stronger our reputation, the better the prospects for the Island’s economic wellbeing. The JFSC can play its part in this, but the responsibility is shared. Government, business and regulator all have a role to play. Ill-judged business choices can unravel hard-won gains. The chase for short-term profits can hamper long-term interests. Let us work together in 2021 to continue to build our reputation.

Invaluable oversight

To close, I would like to thank my fellow Commissioners for their unyielding support and commitment during my first year as Chair. In particular, 2020 was the last full year of Commissioner Wright’s tenure; his retirement in April 2021 marks the end of nine years’ service for the JFSC and the Island. His contribution as Commissioner and Deputy Chair are to be commended. We also said farewell to Commissioners Ruetimann and Whelan respectively, who had both completed two terms in office and offered invaluable oversight and insight during those years.

I must end by honouring the phenomenal efforts demonstrated by our people during 2020. They successfully adopted new ways of working by staying home or respecting public health measures in the workplace so the JFSC could remain open for business. What you have achieved during unquestionably demanding times is testament to your resilience and determination in the face of adversity. My thanks go to Martin Moloney and his Executive team for navigating these unknown waters and achieving so much on the journey. We find ourselves in a strong position to exit these turbulent times and support the Island and its financial services industry as we build back better.

Mark Hoban
Chair