The JFSC FINE IQ EQ Jersey £803K [REDUCED FROM £1.6M] for regulatory breaches - 01 July 2022

The fine

1. The JFSC has issued a civil financial penalty of £803,661.17 on IQ EQ (Jersey) Limited (IQ EQ Jersey) (formerly, First Names (Jersey) Limited (First Names)) for regulatory breaches identified in a professional reporting report issued in 2020.
2. By accepting the findings and agreeing to settle at an early stage, the business avoided a potential fine of £1,607,322.34.

The issue

1. First Names grew rapidly from 2012 to 2016, following the acquisition of other Jersey-regulated trust company businesses.
2. Following this period, and a change in ownership, following which First Names rebranded to IQ EQ Jersey, the JFSC requested that an independent reporting professional assess the effectiveness of IQ EQ Jersey’s processes, systems and controls and compliance with the regulatory framework during the 2018-2019 by reference to a targeted review of 16 customer structures.
3. From the findings of the reporting professional’s review, the JFSC has concluded that during 2018-2019, specific IQ EQ Jersey systems, controls and corporate governance arrangements were in breach of regulatory requirements.

Jill Britton, JFSC Director General, commented:

1. “This penalty is levied against IQ EQ Jersey due to the regulatory breaches identified in a reporting professional’s report.
2. The JFSC  consider the Board of IQ EQ Jersey did not respond adequately to the increased scale and complexity of the business following a series of acquisitions between 2012 – 2016.
3. Failures of this nature have the potential to undermine the integrity and stability of Jersey’s financial services industry.

Ben Newman, IQ EQ Jersey Managing Director, commented:

1. “IQ EQ accepts the findings identified in the public statement issued today by the JFSC, and recognises the challenges presented during the previous period of rapid growth and acquisition.
2. We have undertaken a comprehensive remediation programme, which will further strengthen our systems and controls.
3. We are grateful to the JFSC for the opportunity to work with it to resolve matters which principally arose in acquired businesses.
4. No customer suffered loss from the matters identified.”

The JFSC say

1. By accepting the findings and agreeing to settle at an early stage, the business avoided a potential fine of £1,607,322.34.
2. This is an important case for the JFSC in upholding compliance with international standards.
3. The JFSC  urge all financial services businesses operating in the Island to review the findings identified in the public statement issued today by the JFSC in relation to this case, and to ensure their own compliance with our regulatory framework.”

The full public statement is here

• https://www.jerseyfsc.org/media/5626/2022-07-01-enf-1410-iq-eq-public-statement-final.pdf

Press release

• https://www.jerseyfsc.org/news-and-events/we-have-imposed-a-civil-financial-penalty-on-iq-eq-jersey-formerly-first-names-for-regulatory-breaches/