As a sector, Financial Services have been living “MONEYVAL” for a little while now. And although the assessment is later in the year, there is the distinct feeling of the calmness of a duck floating on a pond with the little legs paddling rapidly below! All interested stakeholders must be feeling the pressure of MONEYVAL, but is it something to overtly panic about? Can we as an Island do much more to effect the outcome?
Whilst all the right noises are coming out of the Government and the JFSC, we can take some comfort from the fact that business will go on regardless of the outcome or the possibility of being “grey” listed.
I have discussed the grey-listing point at length with colleagues and peers in industry and the overriding sentiment seems to be that whilst being grey-listed would have a negative impact on Jersey’s GDP (circa 7%) it may well happen and if it does then we have to deal with it.
From a Government standpoint, jurisdictions have the chance to remediate any findings within a set time and only if we fail, would we be censured. So, in the doomsday scenario this outcome, if it were to happen, may not kick in before 2025! There is plenty of business to be done before then.
Is there any good news?
The Regulator recently stated they had empathy with financial services business that had been working hard to deliver additional data sets to the Commission over the last year. It probably doesn’t help that there have also been changes to the scope of Jersey’s proceeds of crime and money laundering legislation which is adding confusion to those business previously outside of the regulators oversight. This confusion also extends to regulated businesses who may be wondering whether some of their current customer activities are also caught by the changes. All of this adds time, which equals cost – so who pays? Usually the customer!
What does this additional cost of doing business in Jersey actually achieve? A more highly regulated jurisdiction or just a more costly one?
I am not sure.
What I am sure about is that we must continue to communicate transparently with our customers so they can understand why Jersey should be their jurisdiction of choice. This goes for existing customers as well as new ones coming to the Island.
Regulatory cost is not just about the Commission – it’s about how we govern our businesses, what our culture is and our highly skilled workforce. We all have a job to do to keep Jersey as a desirable IFC.
So back to my opening point, MONEYVAL.
Whether we like it or not, or just call it inflation if you like, MONEYVAL is indirectly adding fee rises to customers across the board.
Businesses must adapt to mitigate this mission creep.
At FCM we saw this coming when the pandemic hit in 2020. We invoked our continuity plans which by default started the efficiency drive, hybrid working, digitisation and the like.
Where some businesses reverted to the new “norm” in 2021/2022, we continued with further digitisation to aid efficiency and effectiveness. Meaning we were able to minimise fee increases to our customers this year.
We have also utilised a fixed fee model for the majority of our customers so they have surety in what can only be considered choppy waters in the year ahead.
My takeaway from all of this – Jersey is one of the best IFC’s in the world – and we should keep making sure our customers know it!