Preparing for JFSC examinations and AI guidance

Jersey businesses have several actions to consider in preparation for examinations from the Jersey Financial Services Commission.

In this briefing, which focuses on the Jersey Financial Services Commission's (JFSC's) monthly update for May, we highlight the key points relating to those examinations and how Ogier Regulatory Consulting can help you get ready, as well as looking at the JFSC's upcoming guidance on artificial intelligence (AI).

New guidance on how to prepare for examinations

The guidance encompasses what businesses should do before and during an examination. Key points include that businesses should:

• periodically benchmark the business against the Jersey regulatory framework
• use ongoing internal assessments to identify requisite changes to systems and controls
• keep up to date with industry updates, webinars, guidance notes, examination feedback papers and "quick wins"
• immediately report breaches identified in visit preparation to the examination team and your supervisor
• consider how best to demonstrate processes (live or through screenshots)

The introduction of focused examinations

These examinations are designed to enable the JFSC to understand how businesses are meeting regulatory requirements in a specific, clearly defined area. Targeted financial sanctions will be the first topic examined. Examinations will commence in early June.

The JFSC advises the revised approach includes:

• minimal document collection
• an open and interactive format with typically half a day spent onsite
• tailored feedback specific to the business and focus area 

Questionnaires to support thematic examinations

Questionnaires will now be routinely issued in advance of the onsite examination. The first will be used in the upcoming customer complaints thematic. The JFSC will use responses to assess which businesses are to undertake an examination.

Businesses not selected for a visit may anticipate follow-up from the JFSC if they want to know more about specific matters and, importantly, how responses to the questionnaire have been validated by the board.

AI in financial services

The JFSC will shortly be publishing its guidance on AI. This will set out key considerations for firms as they design and use AI solutions. The JFSC's aim is to provide clarity and support businesses to innovate with confidence. 

The key considerations are:

• AI is no longer experimental and must be embedded into risk and control frameworks
• accountability and governance
• AI output must be:
  
  
  • defensible: lawyers must be able to justify and rely on the results in litigation or investigations
  • auditable: there must be a clear record of how the AI contributed to decisions
  • supportive of human judgment: humans must remain accountable for the final outcome

How can Ogier help

Ogier Regulatory Consulting has designed a range of survey-based diagnostic reviews (including MLRO and MLCO functions and compliance effectiveness) to assist with analysis. These surveys are designed to be effective with minimal business intervention.

We routinely assist businesses with specific topics, update policies and procedures and advise on current best practice, pitfalls, trends and upcoming developments. Members of our team are digital forensics experts and experienced in the application of AI and its defensible use to include governance arrangements.

Contact one of our team with any queries or if you would like to learn more.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice