States Business Plan 2006 - 2010 (P.151-2005) - amendment

STATES OF JERSEY

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STATES BUSINESS PLAN 2006 – 2010 (P.151/2005): AMENDMENT

Lodged au Greffe on 9th August 2005 by Deputy A. Breckon of St. Saviour

STATES GREFFE

STATES BUSINESS PLAN 2006 – 2010 (P.151/2005): AMENDMENT ____________

At the end of paragraph (d), after the words "Table 11.3" insert the words –

     "except     that in the said table, for the following item –

27 LIMITED ECONOMIC Nil Nil PARTNERSHIPS DEVELOPMENT LAW – COMMITTEE

AMENDMENT (30

days)

     th ere  shall be substituted the following item –

27 FINANCIAL ECONOMIC Not yet Not yet

SERVICES DEVELOPMENT identified identified OMBUDSMAN COMMITTEE

(JERSEY) LAW –

NEW LAW (30

days)

"

DEPUTY A. BRECKON OF ST. SAVIOUR

Introduction

In September 2004 I brought a similar amendment, which was narrowly defeated (for information I have attached that amendment and the States Minutes from 14th September 2004). I believed then and now, that by Jersey having a Financial Services Ombudsman it will strengthen the standing of the finance industry, by giving access, at no cost, to the individual, who may feel aggrieved by the action of a financial adviser or institution.

Balance of power

Individual consumers do not always have an easy cost-effective remedy to dispute resolution with financial institutions, whereas businesses can resource departments to deal with these matters, including legal advice, which will not come either easily or cheaply to the individual.

The presence of an Ombudsman gives some power back to the individual against the corporation. Also it gives focus to the grievance. When an Ombudsman becomes involved, quite often matters are resolved between the parties, however, the process needs to be there to facilitate remedy – often without an Ombudsman simple matters can become long, protracted and not resolved.

Isle of Man

I have attached some information about the Financial Services Ombudsman Scheme in the Isle of Man which came into operation in January 2002 but can consider complaints relating to events occurring on or after 20th April 1999.

The Isle of Man boasts that it "is the only British offshore island providing such a scheme for financial complaints".

Jersey can and should do something about that statement.

The Isle of Man "Information Centre" has more very good news.

" The first Annual Report of the Financial Services Ombudsman Scheme is published today (14th April 2003), for the year ending 31st December 2002. The Scheme gives customers worldwide a free, independent and less formal method of resolving disputes with Isle of Man financial firms. The introduction of the Ombudsman Scheme has further enhanced the consumer protection arrangements on the Isle of Man, complementing the established regulators, compensation schemes and Pensions Ombudsman arrangements.

     Om   b udsman Schemes are an accessible alternative to going to court if the complainant has been unable

to resolve the matter directly with the company. In the absence of such a scheme, many people do not have the resources to use the court system especially for disputes involving small sums.

In 2002 the Ombudsman Scheme received 400 initial contacts which resulted in 273 potential

complaints.

In the main, issues raised in complaints tended to concern simple administrative errors by suppliers of

financial services (suppliers'), such as delays carrying out customers' instructions or provision of incorrect information on fund or surrender valuations, and other issues, such as transparency of charges for early surrender of an investment or early repayment of a mortgage.

Of the complaints received, 54 were outside the jurisdiction of the Scheme and a total of 57 complaints

were completed in the year. The majority (35) of the complaints were resolved at the first stage of mediation and conciliation by Office of Fair Trading staff and 22 received formal determinations by an Adjudicator (or ombudsman'). While most of the 22 were upheld either in full or part, most of the sums awarded were modest (usually £600 or less), and in nearly every case included an element in respect of distress and inconvenience suffered.

S ophie Watkins, Head of Research and Operations at the Isle of Man office of Fair Trading said "We have had a very successful first year. We believe the Ombudsman Scheme has proved useful both for

customers  and  suppliers  by  giving  a  free  and  independent  method  of  resolving  complaints.  Ombudsman

schemes are increasingly seen as an important part of a well-regulated marketplace and the Isle of Man is the only British offshore island providing such a scheme for financial complaints."

Jersey Financial Services Commission

I have in my possession a number of documents relating to the background work that has been done by the Financial Services Commission over the last 5 years. I have attached a number of these for information.

* A W  orking Party was set up in 2000/2002 to look at a Financial Services Commission Ombudsman.

– M em  bership attached.

* S ep  tember/October 2002 – sent to Finance and Economics "advised that the Committee will not look at the document until after the forthcoming election".

* 5th   September  2002 – Alan  Breckon  received  copy  of  Working  Party  recommendations  for  Law Drafting Instructions.

–    Extracts    enclosed:

                M em   orandum       – wit h  some options;

                Dra ft M em orandum      – introduction and background;

                Tab  le  of Appendic   es;

                F undi   ng  optio    ns.    

Furthermore, as a Financial Services Commission Ombudsman seemed to be stuck (or neglected) in the system, I wrote to States Members and 50 or so others, in general terms the responses were positive and supportive, including the Chairman of the Jersey Financial Services Commission, Mr. Colin Powell, and Director General (then), Mr. Richard Pratt.

Financing and manpower

There are a number of possibilities for funding, exciting trade associations like estate agents and funeral directors are "trade funded".

The Isle of Man boasts –

" The   Scheme is set up under sections 21A, 21B and 21C of the Financial Supervision Act 1988 and operates out of the Isle of Man Office of Fair Trading. It is funded by the Isle of Man Government.".

In general terms, "trade funding" and meaningful participation is the norm'.

There are a number of ways this can be achieved – with a very small cost to existing businesses but with a substantial benefit.

Conclusion

I believe having a Financial Services Commission Ombudsman in Jersey is a win-win situation.

• C onfidence   for consumers.

• C onfidence   in the Finance Industry.

• A  posit   ive advert for Jersey.

• Governm     ent reacting for reality!

I do not think the world will stop turning if we put back for another day the LIMITED PARTNERSHIPS LAW.

APPENDIX

STATES OF JERSEY

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STATES RESOURCE PLAN 2005 TO 2009 (P.135/2004): SECOND AMENDMENT

Presented to the States on 14th September 2004 by Deputy A. Breckon of St. Saviour

STATES GREFFE

2004 Price code: A P.135 Amd.(2)

STATES RESOURCE PLAN 2005 TO 2009 (P.135/2004): SECOND AMENDMENT ____________

     In   Appen  dix  11  referred  to  in  paragraph (c)  of  the  proposition  insert  the  following  item  into  the

Legislation Programme for 2005 –

"

INANCIAL ECONOMIC None identified None identified

VICES DEVELOPMENT

UDSMAN COMMITTEE

SEY) LAW –

 LAW (15 days)

DEPUTY A. BRECKON OF ST. SAVIOUR

Ombudsman services were first established in Sweden in 1809 to "investigate citizens complaints against public officials".

Since then many basic systems have developed to enable ordinary people to air their complaint or grievance, (at no (or low) cost), about a specific area of public administration or trade/industry, e.g. financial services etc.

Balance of power

Areas of public administration or large, and to some extent small businesses, maybe seen to have a considerable advantage over the individual consumer, however, the Ombudsman can balance that power by being able to seek information and remedy for the "underdog" in an efficient, transparent and user friendly manner.

The Jersey Financial Services Commission is responsible for the regulation, supervision and development of the financial services industry in the Island; key features of this are:

1. reducing risk to the public of financial loss,
2. p rotecting and enhancing the Island's reputation and integrity in commercial and financial matters, and
3. safeguarding the Island's best economic interests.

I believe this should include an Ombudsman Scheme, giving access to local and overseas individuals who may wish to seek cost effective remedy without a costly legal process. Examples of this would be mis-sold endowment policies, hidden charges and costs, linked insurance of other products. Jersey Financial Services Commission licences many businesses, however individuals cannot easily challenge their business practices.

Conclusion

A recommendation was contained in the "Edwards Report" (Published on 19th November 1998, "Review of Financial Regulation in the Crown Dependencies") which said that Jersey's Financial Services businesses should have a statutory Ombudsman scheme, "which will provide an efficient and cost-effective mechanism for the resolution of disputes between financial services businesses and their customers". The "Task Force" that was established in Jersey to respond to "Edwards" agreed with that recommendation and the Financial Services Commission was asked to consult with interested parties and to prepare law drafting instructions for which law drafting time was allocated to enable a scheme to be introduced as soon as possible.

An Ombudsman Working Party was set up by the Financial Services Commission with a brief to prepare law drafting instructions for a Financial Services Ombudsman Scheme. The Working Party included a good cross- section of the various strands of the finance industry and concluded its work in September 2002 and passed information to the Finance and Economics Committee for approval - nothing happened.

This amendment seeks to generate some positive activity for the benefit of the individual and the finance industry.

There are no financial or manpower implications for the States arising from this amendment.

States Minutes of 14th September 2004 show –

THE STATES, following further consideration, rejected an amendment of Deputy Alan Breckon of St. Saviour that in Appendix  11 referred to in paragraph  (c) of the proposition there be inserted the following item into the Legislation Programme for 2005 –

"

FINANCIAL SERVICES ECONOMIC DEVELOPMENT None identified None identified OMBUDSMAN (JERSEY) COMMITTEE

LAW – NEW LAW (15

days)

" Members present voted as follows –