Jersey’s Deputy Ian Gorst says, ‘I want us to get back to having a regulator that can advise’.

Following recent revelations about the Jersey Financial Services Commission in the JEP’s investigative series, the minister with responsibility for the organisation – Deputy Ian Gorst – speaks to Orlando Crowcroft

'This is about a better future – we cannot change the past' https://edition.pagesuite.com/infinity/article_popover_share.aspx?guid=7cdb2848-aaad-41e1-a6d0-34f71b93180f&share=true&appcode=JEEVPO

IN today’s Saturday Interview, Deputy Ian Gorst responds to a number of allegations and assertions made by many of the people we spoke to about the feared regulator.

We were unsure until he sat down to talk to our investigations editor, Orlando Crowcroft, yesterday morning whether he would close ranks and defend the JFSC or seek to take a different course. To his credit, the experienced minister chose that second option and, as a result, there is now some positive light on the horizon.

Deputy Gorst has always been a measured politician of the give-little-away persuasion. As frustrating as it can be for someone looking for clear answers, that is arguably an admirable quality for someone who sets out to be a Jersey statesman, at home and overseas. If you want hard-hitting, punchy comments, he is definitely not your man.

It is with that insight that his comments today need to be read and, for all their circumspection and qualification, they are game-changing.

He says that he recognises the picture painted by many of the people we spoke to and says that bullying is not acceptable in anybody linked to government.

He is supportive of looking at a third-party appeals process and in considering how the scope of the freedom-of-information law could be extended to cover the JFSC. Crucially, he would also like to work with the regulator to examine how it might become a critical friend rather than a sworn enemy of regulated entities. All that shows steps in the right direction.

It would be all too easy to sit here and say that it is all too little too late. But this is about a better future – we cannot change the past.

The JEP is looking to that future, a future where many bodies, including the regulator, can play a more collaborative part in securing the prosperity of a well-regulated island.

That is in all of our interests.

Just as he did after the Independent Jersey Care Inquiry, Deputy Gorst has said many of the right things. In essence, he has been open and honest, admitting, in his own way, that things have not been anywhere near as they should have been. But, just like after the care inquiry, these words of contrition are the start of the journey and not the end. We now need action.

The good news is that many of the answers are already out there. For example, in a letter to this newspaper, Leslie Norman, an experienced finance professional who cares deeply about fairness and thesuccess of this island, put forward a very sensible, low-cost solution to one of the issues.

“Might I suggest that one way to approach this would be to invite anyone who has had a Public Statement made against them to have the opportunity to meet an independent arbitrator to have their case reviewed,” he wrote. “This should be done on a totally confidential basis, with the arbitrator having access to the JFSC files and receiving evidence from the complainant.” What a great idea.

Jersey’s prosperity was built on the back of upstanding and proud Islanders with a keen sense of fair play and common sense. Somehow, in this age of faceless bureaucrats and the emergence of a dictatorship of box tickers, we have lost touch with too much of that.

As for the JEP, this is a ceasefire with a hope for peace. Deputy Gorst has indicated that things will change, but we have yet to hear from the regulator. Will the JFSC double down, or will it show the contrition, humility and self-awareness now demanded and acknowledge that it has become a bully and needs to reset? Let’s hope they follow where Deputy Gorst has led.

For our part, we will continue investigating.

Since the publication of the first part of the investigative series, we have been contacted by many more people, including former JFSC employees who have been silenced by compromise agreements and NDAs.

Well, there is some good news for people in that situation – no one has been taken to court for breaching gagging orders which run so contrary to the public interest of our island. Just imagine the JFSC seeking to take little Mr Smith to court because he dared to tell the truth. We’d make mincemeat of them.

All Island Media, the parent company of the JEP and Bailiwick Express, would even go further and provide a financial indemnity to anybody who wanted to come forward and tell their story, which would protect them from any such court action. So, the JFSC and the minister have time to set out their response in detail to get us back to where we should be. We expect an action plan and a timetable to meet those aims.

But we will continue speaking to people about the issues already touched upon and in relation to other historical allegations, some of which are arguably much more serious than those already covered.

If you want to tell your story, please contact us.

The ball is very much in the JFSC’s court now. It is never too late to do the right thing.

This week has highlighted a couple of other issues in relation to our reporting.

Deputy Gorst has shown real leadership is listening and being open. That is also something that marks out Deputy Tom Binet.

He has finally called out the mess at Health, a vital step on the road to much-needed improvement. If this is the start of a cultural change towards more open, authentic and less remote government, this a good day for Jersey. It could also be the first step towards politicians reconnecting with the Island, healing deep wounds and winning back our trust. Imagine what we could achieve if that happened.

And finally, people have said that we have gone too hard at the JFSC and we should have sought to find a solution in the cosy surrounds of some corporate boardroom. The truth, however, is that it is exactly that closed-door dealing which is so open to abuse that has led to the mess we find ourselves in. It is time Island leaders started doing things the right way as a first step to Jersey becoming the island it could so easily be. That is what the JEP will continue campaigning for.

'You have brought [forward] the need to revisit the enforcement processes'

https://edition.pagesuite.com/infinity/article_popover_share.aspx?guid=9359241d-b362-46af-a8aa-8baa6f3820a2&share=true&appcode=JEEVPO

By Orlando Crowcroft ocrowcroft@jerseyeveningpost.com

THE government will explore the setting up of a third-party appeals process for those threatened with sanctions by the Jersey Financial Services Commission, the Island’s financial services regulator, following an investigation by the Jersey Evening Post.

External Relations Minister Ian Gorst also told the JEP that he was “not opposed” to the JFSC being added to the list of organisations that are subject to the Freedom of Information Law, giving the public the right to demand information from the regulator for the first time.

Both initiatives have formed part of a JEP campaign that follows a wide-ranging investigation that included allegations of bullying and misuse of power by the JFSC’s enforcement division, as well as highlighting concerns about a lack of transparency and accountability at the regulator, described by critics as “a law unto themselves”.

Deputy Gorst said that the lack of an appeals process to JFSC decisions besides recourse to the Royal Court, which is beyond the means of many Islanders, would be added to the remit of the ongoing Strategic Review of Jersey’s Regulatory Environment, due to be published in 2025.

“You have brought [forward] the need to revisit the enforcement processes,” he said of the JEP reporting on the issue.

“[We will] look at other jurisdictions that do have appeals processes, which I think we can learn from, we’ll want to see how successful they are.

“I think that we look back in hindsight and think it might have helped those individuals who feel that their lives [...] have been blighted and ruined by enforcement action. If they had another course of action outside of the Royal Court, that might have gone some way to helping [them].”

On the question of the JFSC being added to the list of organisations that are subject to FOI, he said that he “was not opposed” to it, although historically he had been against it due to the lack of proper safeguarding for commercially sensitive activity.

“But I think if we could deal with that, then that will take away a lot of the opposition for having FOI extended to those bodies – [and] that would be a good thing,” he said.

Deputy Gorst cautioned, however, that there would be a cost associated with it that would be passed on to those who pay for the JFSC, namely businesses regulated by them.

More generally, Deputy Gorst said that he wanted the regulator to return to being “a regulator that can help advise and understand firms and help us be more competitive”.

“I am working with the regulator to make sure that we move forward. I see it very much as hand-in-hand work, and that they and I are in it together,” he said.

'I want us to get back to having a regulator that can advise' https://edition.pagesuite.com/infinity/article_popover_share.aspx?guid=201b216b-5b29-4524-bc39-468b25e6e9e2&share=true&appcode=JEEVPO

 

SITTING at the head of a table in a drab conference room in the depths of the government’s Broad Street headquarters, and flanked by a pair of stern-faced advisers, Deputy Ian Gorst has the appearance of a man at war.

It has been a week since the Jersey Evening Post published a series of allegations about the Jersey Financial Services Commission, the finance regulator which, as External Relations Minister since 2024, Deputy Gorst has ultimate responsibility for.

The JEP’s investigation included interviews with dozens of individuals who claimed to have had their lives ruined by the organisation’s enforcement division, and highlighted the fact that, unlike many jurisdictions, there is no third-party appeal process to challenge decisions made by the regulator. As such, say critics, the JFSC is judge, jury and executioner: able to destroy careers and companies at will.

It is a power in which the JFSC has proved itself adept at wielding. Even those firms which have fought back find that they have won the battle and lost the war. In 2020, SWM Ltd, a wealth management firm, won a six-year court fight against the regulator.

Despite winning the case, SWM could not get professional indemnity insurance and was forced to close its doors.

The JEP was repeatedly warned off the story: “My advice is to drop this,” one former finance executive said. “They will ruin your life like they ruined mine” and the JFSC has refused to engage other than a brief written statement. The regulator has remained silent in the week since, other than a vague statement that said it took the reports “extremely seriously”. That silence, critics say, is fitting for an organisation that has always been unaccountable and remote.

But despite the similarities between this windowless government office, with its dual flags (British and Jersey) and bare walls, and a war room, Deputy Gorst is feeling conciliatory.

“The first thing to say is that I recognise the disquiet and concern which some of the individuals had reported and spoken to you about,” he told the JEP.

“I don’t accept bullying in any way, shape or form, and some of the stories that you reported on gave the impression that those individuals felt that they had been bullied, and that’s not appropriate anywhere in any arm of government.”

One of the key areas highlighted in the JEP’s investigation was the lack of a formal right to appeal against JFSC sanctions, which can include financial penalties and often the use of public statements: a formal reprimand that is published on the regulator’s website and visible for the whole world to see. Many of those who spoke to the JEP had been subject to public statements and had been unable to work in the finance industry – or often, any industry – ever since.

In some cases, the use of public statements has been appropriate. In 2018, the JFSC sanctioned and issued a statement on Christopher Paul Byrne, who ran Lumiere Wealth. Byrne was jailed for seven years in November 2018 for running a high-risk fund that was described as a Ponzi scheme and in which at least 12 clients lost over £2.7 million.

But in many cases, it has not. Advocate Olaf Blakeley told the JEP of a number of clients he had represented “who did nothing wrong”, and the JEP heard from several others who made relatively minor procedural errors and were subsequently issued with a statement. “It has been overzealous, and aimed its fire at members of the industry who are neither fraudsters nor people who fall below the standards,” Advocate Blakeley said.

One of the main issues was that the only way to oppose a JFSC sanction – including a public statement – was an appeal to the Royal Court, an expensive and time-consuming process that is beyond the means ‘ of many. It was this lack of recourse that led many in the industry to describe the regulator as “a law unto themselves” and as “judge, jury and executioner”.

Deputy Gorst told the JEP that he felt the use of public statements was important, even if they were controversial, as the fines issued by the JFSC tended not to be enough of a deterrent, whereas a public statement was genuinely impactful in our internet age. That said, the lack of a right to a third-party appeal was an issue, Deputy Gorst admitted, and would be addressed.

“You have brought [forward], again, the need to revisit the enforcement processes,” he said of the JEP reporting on the issue.

“[We will] look at other jurisdictions that do have appeals processes, which I think we can learn from. We’ll want to see how successful they are.”

Deputy Gorst said that the issue of a third-party appeals process would be added to the scope of the Strategic Review of Jersey’s Regulatory Environment, launched on the same day that MoneyVal’s assessment of the Island’s finance industry was published on 24 July and due to be completed in the second quarter of 2025.

“The government is undertaking a strategic review of the regulatory environment, and in that review, it will be including – and considering – your point, about a third-party appeals process within the enforcement procedures,” he said.

“It would seem to me that Jersey as a whole has probably moved on from [having only] a simple appeal to the Royal Court. It would seem to me that we will probably come forward with changes to that process.

“I think that we look back in hindsight and think it might have helped those individuals who feel that their lives [...] have been blighted and ruined by enforcement action. If they had another course of action outside of the Royal Court, that might have gone some way to helping [them].”

A second revelation in the JEP investigation into the JFSC was the fact that, unlike in the UK, the regulator is not subject to the Freedom of Information Law, which gives the public the right to ask questions about its work and budget. The JEP highlighted last month that this exclusion comes despite a 2014 vote by the States Assembly to properly consider extending the ambit of the law to the JFSC and extending it to wholly-owned or majority controlled States entities, a decision that was never actioned.

Deputy Gorst said that he “was not opposed” to the JEP’s campaign to have the JFSC and other arms-length bodies added to the FoI law, although historically he had opposed it due to the lack of proper safeguarding for commercially sensitive activity.

“But I think if we could deal with that, then that will take away a lot of the opposition for having FoI extended to those bodies – [and] that would be a good thing,” he said.

Deputy Gorst cautioned, however, that there would be a cost associated with it that would be passed on to those who pay for the JFSC, namely businesses regulated by them.

He also commented on the frustration in the Island about a spate of recent data breaches from the JFSC that, in July, saw the information of 261 people with companies and trusts published due to an issue that occurred during system maintenance.

It was the second time in 2024 that the regulator had inadvertently published non-public information.

“I do understand the frustration of industry who feel that, had they had a data breach, the regulator would have taken a view about management of systems, management of data, which would have been tough,” he said.

But Deputy Gorst said that he had not yet seen the root-cause analysis of the breach, but “once we’ve seen [it], will be the time for us then to sit down again with the regulator and talk through what the implications are and how we move that forward to together”.

In general, the recent revelations about the JFSC in the JEP, Deputy Gorst said, have only heightened the need for the ongoing strategic review which, with hindsight, he said, “could have been undertaken earlier”.

He added, though, that the JFSC was independent from government and must remain so.

Mr Gorst said that he met the chair of the board of the JFSC “once a month” and the entire board more irregularly. “[We last met in] September, and we said then that we need to do that more frequently.” He said that while he doesn’t meet the director general, Jill Britton, regularly, “my officials meet her on a weekly basis”.

He said that the “gateways” by which the regulator was able to communicate with ministers “aren’t really clear enough”.

“The regulator holds more and more information about the financial services industry in Jersey [and] that aggregated data – on authorisations, on enforcement – can really help with trust and accountability,” he said.

“It also helps with [...] competitiveness: What are the trends that are happening and have we got the right products that clients are wanting? Are we registering enough Jersey companies?”

It sounds like Deputy Gorst is saying that it is time for the government to be more involved with the regulator than it has in the past? “Involved is a word that could mean different things to different people,” he said, adding that international standards prohibit too much government intervention in the regulator.

“I’m certainly looking to get more involved with whether we’ve got the right regulatory laws in place and how we are implementing that regulation.”

A criticism of many is that the JFSC does not effectively carry out its role as a critical friend to the finance industry and that, indeed, the regulator is the last place that firms or individuals would go to for advice.

But Deputy Gorst said that part of this remoteness was also the requirement of international standards and the way the Island is assessed under them.

“It’s become more difficult for a regulator to give advice in the way that they might have done ten years ago,” Deputy Gorst said.

“[But] I want us to get back to [having] a regulator that can help advise and understand firms and help us be more competitive.

I am working with the regulator to make sure that we move forward. I see it very much as hand-in-hand work, and that they and I are in it together.”

‘I’m certainly looking to get more involved with whether we’ve got the right regulatory laws in place and how we are implementing that regulation

SOURCE

https://edition.pagesuite.com/infinity/article_popover_share.aspx?guid=201b216b-5b29-4524-bc39-468b25e6e9e2&share=true&appcode=JEEVPO