The recent Government / JFSC webinar which explained their consultations on proposed changes to enforcement and civil penalty powers and processes seems to have been an important moment in crystallising what was already clear to many people – the industry-wide shortage of decent compliance personnel.
There is no doubt that working in compliance can be tough – it requires a blend of skills (effective communication, calmness under fire, diplomacy, lateral-thinking and problem-solving) on top of a knowledge of technical requirements that are extensive and ever-changing. Then there is the increasing pressure and level of expectation from the regulator and, now, the impending elevated risk of personal financial penalties. The stresses of the job, particularly in the past pandemic year, can be very significant and personnel can at times feel quite alone and friendless.
For firms in Jersey, there is a limited pool of people from which to draw. And this affects all firms, even Cyan where we’re always looking for excellent people to join us who are keen to embrace the challenge and variety of what we do.
Unfortunately, there are no easy answers. We’re aware that some firms are considering outsourcing some compliance processing tasks to other jurisdictions, similar to the fairly common outsourcing of accounts preparation, and we can understand the rationale and potential benefits of this, whilst acknowledging that there are risks and pressures inherent in such an approach, particularly for the Key Person who will, of course, remain responsible for the outsourced work whilst lacking proximity to the resources that undertake the work. And firms can engage firms such as Cyan to provide interim support during times of high demand or to cover staff shortages. But firms can’t typically outsource the Key Person roles, as is permitted in some other jurisdictions. Even then, such outsourcing is not a magic solution to everyone’s problems and it’s not commercially viable for many firms.
Whilst we wish we could suggest a simple solution to the issue, a combination of measures is likely to be the most productive way forward. Based upon Cyan’s experience in the market place, we provide a selection of ideas below:
- A bipartisan focus on improving two-way communication and engagement between the financial services sector and the regulator.
- Whilst the extension of civil penalties to Key Persons seems inevitable and consistent with international requirements, implementation should be undertaken with sensitivity and as transparently as possible – clearly, driving already scarce compliance resources out of the industry will not benefit the regulator, the financial services sector or the Island’s economic sustainability.
- The distribution of regulatory reporting submissions deadlines across the calendar year would help to smooth the corresponding compliance deliverables and workloads, thereby relieving those pressure points.
- More effective training for compliance personnel of all levels, with emphasis given to the soft skills referred to above, as well as technical knowledge.
- Improved co-ordination between and support from industry bodies and training organisations operating in Jersey.
- Recognition across industry of the need to support compliance personnel in order to encourage individuals to both join and remain in the compliance field. Directors, senior management and human resource teams have pivotal roles to play here.
Both Government and the JFSC are seeking (anonymised) responses to their consultations – these can be accessed from the JFSC website, with views and comments to be provided by 1 September 2021. We think it’s important to contribute to this consultation if you feel able to do so. We at Cyan would also be interested to hear your thoughts, experiences and suggestions, particularly if you work in the compliance arena. And we’re always available if you would like to catch up for a discussion on these or any other relevant matters that are important to you.