Offshore Ombudsman: Financial Ombudsman Service for Jersey and Guernsey on its way
With the first glimmers of spring breaking through the clouds, the Ombudsman, like many of us, is packing his bowler and planning a trip off-shore.
His holiday plans were recently revealed in the Draft Financial Services Ombudsman (Jersey) Law 201 published by the States of Guernsey on 20 January 2014.
While joint plans for a fifty-fifty co-funded Jersey and Guernsey Office of the Financial Ombudsman Service ("OFOS") have been in the regulatory pipeline since 2010, this is the first time we have had the opportunity to see how the Scheme will function in practice. Although only the Jersey legislation has been published to date, given that the Scheme will be common to both Islands, we expect the Guernsey legislation to be similar. Interestingly for UK-regulated firms, Jersey and Guernsey received guidance in establishing their Scheme from David Thomas, the Lead Ombudsman for Strategy and Board member of the UK FOS.
The OFOS will operate from a single office based in Jersey with a single staff and board. The budget (£582,626 in year 1) has been drawn up on the basis that there will be 700 'mature' complaints per year (complaints that have already received a final response). The key elements of the OFOS apparent from the Jersey legislation are that:
- eligible complainants will include individuals, microenterprises (as defined by the European Commission) and charities, trusts, foundations and other bodies specified in the Order;
- complainants can be resident anywhere in the world;
- complaints must relate to an act in the course of relevant financial services business provided in, or from within, Jersey;
- the act to which the complaint relates must have occurred after the 'starting point' of 1 January 2010;
- the complaint must be referred to the Ombudsman within 6 years of the act and 2 years after the complainant should have become aware of the cause for complaint;
- the complaint must be referred to the Ombudsman within 6 months after the provider of financial services has provided its final response to the complainant, however, this is subject to the provider handing complaints correctly by giving the appropriate notification of the availability of the Ombudsman and the 6 month time limit;
- financial services providers have 3 months to consider the complaint and provide a final response and complainants may refer their complaint to the Ombudsman if financial services providers don't comply with this time limit; and
- the Ombudsman has the discretion to assist complainants in recovering awards.
While all of this will be familiar, we believe that the establishment of the OFOS scheme is designed to make Jersey and Guernsey more attractive to investors than other offshore jurisdictions which don't provide such protections. However, if this is the case it is somewhat surprising that it has taken Jersey and Guernsey so long to set up their own FOS given that the Isle of Man FOS, run by the Isle of Man Office of Fair Trading, became operational in January 2002.
As FOS anoraks, we will be watching to see how the Ombudsman settles in to his new Channel Islands home.