Jersey To Broaden Regulation Of Pensions Advice
by Amanda Banks, Lowtax.net, London
06 April, 2018
Jersey's financial services regulator, the Jersey Financial Services Commission, is consulting on a proposal to expand the island's Investment Business regime to regulate advice given on transfers out of defined benefit pension schemes.
Under the proposal, advice given to an investor or potential investor to acquire, dispose of, underwrite, or convert a defined benefit scheme would be brought within the scope of the Investment Business regime.
The Commission says the proposed change has been prompted by a number of cases where transfers of benefits from defined benefits schemes have been made on the basis of incomplete advice, and without adequate disclosure on the associated risks.
The Commission also says the proposed change is intended to clarify the current regulatory treatment of pension transfer advice. While advice on a transfer out of a defined benefit scheme would often be caught by other regulation, because of a related recommendation to invest the proceeds in one or more investments, the Commission says there is inconsistency in how this is interpreted in the industry and a possibility firms could seek to structure themselves in a manner to avoid regulation.
The proposed change would be implemented by changing the definition of "investments" in Schedule 1 of the Financial Services (Jersey) Law 1998 so that it cross-refers to the definition of "defined benefit schemes" set out in Jersey's Income Tax Law.
To assist persons advising on defined benefit schemes who are currently unregulated, a three-month transitional period is proposed to allow them time to make an authorization application to the Commission to carry on investment business.
The Commission is inviting comments on its proposal, which is contained in a consultation paper available on its website. The last date for comments is April 18, 2018.
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