This content has been automatically generated from the original PDF and some formatting may have been lost. Let us know if you find any major problems.
Text in this format is not official and should not be relied upon to extract citations or propose amendments. Please see the PDF for the official version of the document.
_ ___ ---
Jersey Bank Depositors
Compensation Board
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS 31 JANUARY 2021
R.125/2021
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD REPORT AND AUDITED FINANCIAL STATEMENTS CONTENTS
Page Information
Board's report 2-3 Board's responsibilities statement
Independent auditor's report 5-7 Statement of Comprehensive Income
Statement of financial position
Notes to the financial statements 10 -14
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD Information
Board members Paul Leary, Chairman
Peter Shirreffs
Amy Taylor
Tom Fothergill (appointed on 5 October 2020) Ian Henderson (appointed on 5 October 2020)
Independent auditor BDO Limited
Windward House
La Route de la Liberation St Helier
Jersey
JEi 1 BG
Bankers HSBC Bank plc
PO Box 14
27 Halkett Street St Helier
Jersey
JE4 SNJ
Lloyds Bank International Limited PO Box 10
9 Broad Street
St Helier
Jersey
JE4 8NG
Accountants Halford Accountants Limited
Chartered Certified Accountants Les Sapins
Rue De La Guilleaumerie
St Saviour
Jersey
JE2 7XF
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD
Board's Report
for the year ended 31 January 2021
The Jersey Bank Depositors Compensation Board (the "Board") presents its report and the audited financial statements for the year ended 31 January 2021.
Principal activities
The Board was created as a result of the Banking Business (Depositors Compensation) (Jersey) Regulations 2009 ("the Law").
The functions of the Board are generally to administer the Bank Depositors Compensation Scheme ("DCS"), including establishing and maintaining arrangements in readiness for the possibility of a default of a bank operating in Jersey and administering compensation for any such default. Its function also includes arranging for the publication of information for the public on the operation of the DCS.
An administration levy fee continued to be raised in the current year which was utilised to achieve the above functions and also help maintain a prudent reserve. After discussions between the Board, the Jersey Bankers Association and the Government of Jersey, it was agreed by the External Relations Minister that for the Board to continue to fulfil its functions, it required to maintain the annual levy for 2020/21 at £9,000 per licence holder.
No compensation levy fee was raised as there was no bank default in the current year.
This 12-month period was something of a landmark for the Board in that it worked intensively to develop a new depositor pay-out system to replace a previous solution that had gone beyond its useful life.
After a comprehensive assessment process lasting many months, and working in tandem with experts from the Jersey Bankers Association, the Board entered into a software as a service contract with professional services advisory firm Deloitte LLP to utilise their claims management proprietary software engine CMS Pro to develop a JDCS-tailored pay-out solution. The initial contract was signed in September 2020 and a final version incorporating revisions required by the Board, in December 2020. The Board is content that it managed to achieve excellent value for money in securing the new solution compared to the costs incurred by comparable jurisdictions across Europe.
The new pay-out tool requires bank data to be ingested in the form of a Single Customer File (SCV). Significant progress was made during 2020 in working with banks for them to develop the required SCV files. A deadline of 30 June 2021 is in place for banks to meet the specification issued by the Board.
Other related projects will continue during 2021 to develop required support services and undertake systems testing as the Board works to achieve a claims management solution that is both jurisdictionally appropriate and sufficiently flexible to respond to any default scenario that may occur.
Elsewhere, the Board continued to contribute to the European Forum of Deposit Insurers ("EFDI") and Affiliation of Micro European States (AMES) through attending meetings of the organisations.
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD
Board's Report (continued)
for the year ended 31 January 2021
A value for money decision was made by the Board to resign its membership of the International Association of Deposit Insurers on 31 December 2019 due to a proposed significant increase in membership fees. Consequently no fee was levied in 20/21. The Board remains a member of the European Forum Of Deposit Insurers (EFDI) and also a member of the Affiliation of European Micro States (AMES), an EFDI sub-committee of smaller territories.
No payment was made to the Outsourcer in 20/21, This fee was previously levied for support in systems testing. The systems in question were close to redundancy and such testing support would not represent value for money.
Members
Paul Leary, Peter Shirreffs and Amy Taylor were members of the Board throughout the year. Tom Fothergill and Ian Henderson were appointed to the Board on 5 October 2020. Advocate Mark Dunlop resigned from the Board effective 2 February 2020 after completing afour-year term of office. His resignation was formally accepted by the Board at its meeting on 28 January 2020 and he was formally thanked for his exemplary service by way of letter from the Chair dated 9 February 2020.
Results
The Statement of Comprehensive Income of the Board for the year is set out in detail on page 8. Disclosure of information to auditor
Each of the persons who are members at the time when this Board's Report is approved has confirmed that:
• so far as that member is aware, there is no relevant audit information of which the the Board's auditor is unaware, and
• that member has taken all the steps that ought to have been taken as a member in order to be aware of any relevant audit information and to establish that the the Board's auditor is aware of that information.
Independent audtors
The independent auditor, BDO Limited, has expressed their willingness to continue in office. This report was approved by the Members on~'~,(,~, ~~,~~ and signed on their behalf by:
f,,
Chairm
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD
Board's Responsibilities Statement for the year ended 31 January 2021
The Board is responsible for preparing the report and financial statements in accordance with applicable Jersey law and regulations and generally accepted accounting principles.
The Banking Business (Depositors Compensation) (Jersey) Regulations 2009 (the "Law") requires the Board to prepare financial statements for each financial year. Under that Law the Board has elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' ("FRS 102") .Under the Law, as applied to the Board, the Board must not approve the financial statements unless satisfied that they give a true and fair view of the state of affairs of the the Board and of the surplus or deficit of the the Board for that period.
In preparing these financial statements, the Board is required to:
• select suitable accounting policies for the the Board's financial statements and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the entity will continue in business.
The Board is responsible for keeping adequate accounting records that are sufficient to show and explain the Board's transactions and disclose with reasonable accuracy at any time the financial position of the Board and to enable them to ensure that the financial statements comply with the Law. They are also responsible for safeguarding the assets of the Board and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Board confirms that they have complied with the above requirements in the preparation of the financial statements.
Tel: +44 (0)1534 510100 Windward House
Fax: +44 (0)1534 759425 La Route de la Liberation www.bdo.je St Helier
Jersey
Channel Islands
JE1 1BG
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE JERSEY BANK DEPOSITORS COMPENSATION BOARD
Opinion
In our opinion, the financial statements:
• give a true and fair view of the state of the Board's affairs as at 31 January 2021 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Accounting Standards; and
• have been prepared in accordance with the requirements of the Banking Business (Deposit Compensation) (Jersey) Regulations 2009.
We have audited the financial statements of The Jersey Bank Depositors Compensation Board ("the Board") for the year ended 31 January 2021 which comprise the Statement of Comprehensive Income, the Statement of Financial Position and notes 1 to 11 to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Board in accordance with the ethical requirements that are relevant to our audit of the financial statements, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Board members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Board's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Board members with respect to going concern are described in the relevant sections of this report.
Other information
The Board members are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard. Responsibilities of Board members
As explained more fully in the Board's Responsibilities Statement, the Board members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Board members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board members are responsible for assessing the Board's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board members either intend to liquidate the Board or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We considered the laws and regulations that could give rise to a material misstatement in the financial statements. Our tests included, but were not limited to:
• agreement of the financial statement disclosures to underlying supporting documentation;
• enquiries of management regarding known or suspected instances of non-compliance with laws and regulations;
• obtaining an understanding of the control environment in place to prevent and detect irregularities; and
• review of minutes of Board meetings throughout the period.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities for the audit of the financial statements is located at the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Board's members, as a body, in accordance with the requirements of the Banking Business (Deposit Compensation) (Jersey) Regulations 2009. Our audit work has been undertaken so that we might state to the Board's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Board and the Board's members as a body, for our audit work, for this report, or for the opinions we have formed.
BDO Limited Chartered Accountants Jersey, Channel Islands 24 June 2021
Statement of Comprehensive Income for the year ended 31 January 2021
Notes 2021 2020
£ £
Administration levy income 171,000 171,000
Administrative expenses
Information technology, maintenance and support costs Board members' remuneration
Membership fees
Outsourcerfees
Professional and secretarial fees Travel and subsistence Auditor's fees
Accountancy fees Conferences and training Telephone charges General office expenses
insurances Bank charges
Total administrative expenses
Operating profit
Interest receivable
Total net comprehensive profit for the year
54,617 38,970 33,125 33,625
3,574 20,669
- 10,000
39,759 33,352
- 1,419
4 3,662 3,833
600 1,175
460 783 1,247 1,085 2,044 1,149
8,uy2 7,728
481 1,283
147,661 155,071 23,339 15,929 15 182 23,354 16,111
All amounts relate to continuing operations.
There were no recognised gains or losses other than those included in the Statement of Comprehensive Income.
There was no other comprehensive income for 2021 (2020: £NIL).
The notes on pages 10 to 14 form part of these financial statements.
Statement of Financial Position as at 31 January 2021
Notes 2021 2020
£ £ £ £
Current assets
Debtors 5 162,738 4,652 Cash at bank and in hand 6 198,062 171,535
360,800 176,187
Creditors: amounts falling due within
one year 7 (174,002) (12,743)
Net current assets 186,798 163,444 Net assets 186,798 163,444
Represented by:
Retained surplus 8 186,798 163,444 Total administrative reserve fund 186,798 163,444
These financial statements on pages 8 to 14 were approved and authorised for issue by the Board and were signed on their behalf on Z 4 J~,~ ~,
Charii n
The notes on pages 10 to 14 form part of these financial statements.
for the year ended 31 January 2021
1 Accounting policies General information
The Jersey Bank Depositors Compensation Board (the "Board") was created by the Banking Business (Depositors Compensation) (Jersey) Regulations 2009 (the "Law") and is domiciled in Jersey. The Board consists of five appointed members assisted by a representative of the States of Jersey.
Statement of compliance
The financial statements of the Board have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland" (FRS102") effective 1 January 2015. The financial statements have also been prepared in accordance with the Law, which came into force on 6 November 2009, which was subsequently amended on 2 October 2012 by the Banking Business (Depositors Compensation) (Amendment and Miscellaneous Provision) (Jersey) Regulations 2012 and further amended on 28 January 2020 by the Banking Business (Depositors Compensation) (Amendment No 20 (Jersey) Regulations 2020.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated.
Basis of preparation
These financial statements are prepared on a going concern basis, under the historical cost convention.
The financial statements of the Board are presented in British Pounds ("£"), being the functional currency of the Board. The Board has determined its functional currency based on its primary economic environment.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the entity's accounting policies (see note 2).
Exemptions for qualifying entities under FRS 102
FRS 102 allows a qualifying entity certain disclosure exemptions, subject to certain conditions, which have been complied with, including notification of, and no objection to, the use of exemptions by the Board.
The Board has taken advantage of the following exemptions:
• preparation of a statement of cash flows, on the basis that it is a qualifying entity as required by FRS 102 paragraph 3.17 (d).
for the year ended 31 January 2021
1 Accounting policies (continued)
Going Concern
The Board has prepared the financial statements on a going concern basis. The Board considers this to be appropriate as they are in a position to raise administration levies on banking groups in Jersey according to the financial needs of the Board and in particular its recurring administrative costs in a particular period. The Board prepares a budget on an annual basis to project its future financial needs and is satisfied there are sufficient funds to continue as a going concern.
Revenue
Under the Law the Board can raise two types of levy income:
- Administration levy income
Levy income is raised by the Board on an annual basis to enable it to meet its recurring administrative costs in each registration year. The level of levy is decided by the Board and is payable by each bank registered on the island of Jersey under the Banking Business (Jersey) Law 1991. Administration levy income is recognised on accruals basis and applies for the whole year in which each bank was registered.
- Compensation levy income
Compensation levy applies if any of the banks registered in Jersey becomes bankrupt
A bank that is not in default is liable to pay a compensation levy, in respect of the bank that is in default, if;
- the Board publishes a notice specifying the relevant date in respect of the bank in default; and
- the bank that is not in default held eligible deposits on that relevant date.
The total amount of the compensation levies to be paid by the banks liable to pay such a levy in respect of a bank in default will have to be sufficient to raise such amount as the Board estimates will be necessary to meet payment by it of compensation in respect of the bank in default and the Board's default -related administrative costs in that respect.
Administrative expenses
Administrative expenses are charged to the Statement of Comprehensive Income and recognised on an accruals basis in relation to the period they relate to.
Finance costs
Finance expenses are charged to the Statement of Comprehensive Income and recognised on an accruals basis in relation to the period they relate to.
Debtors
Short term debtors are measured at transaction price, less any impairment.
THE JERSEY BANK DEPOSITORS COMPENSATION BOARD Notes to the financial statements
for the year ended 31 January 2021
1 Accounting policies (continued) Cash and cash equivalents
Cash is represented by cash on hand and demand and deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
Creditors
Short term creditors are measured at the transaction price. Operating leases
Operating lease payments are recognised as an expense on a straight line basis over the lease term.
Interest income
Interest income is rar.~~nisPd in the StatP~nPnt of rmm~rPhancive Inrnma iisin~ thg gffartiva interest method.
Interest income is recognised in the Statement of Comprehensive Income on an accruals basis. 2 Judgements in applying accounting policies and key sources of estimation uncertainty
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Board considers there to be no estimates or judgements.
3 Taxation
The Board is exempt from Jersey income tax. Therefore a provision has not been made in these financial statements for Jersey income tax.
4 Auditor's remuneration 2021 2020
£ £
Fees payable to the Board's auditor 3,662 3,833 5 Debtors 2021 2020
£ £
Other debtors and prepayments 162,738 4,652
The significant increase in prepaid costs compared to the prior year relates to a supplier invoice received in January 2021 in the sum of £162,800 for the annual subscription fee for CMS Pro Saas delivery. This amount payable is included in trade creditors in note 7 below as the invoice was settled following year end.
for the year ended 31 January 2021
6 Cash and cash equivalents
Cash at bank
7 Creditors: amounts falling due within one year
Trade creditors
Accountancy accrual
Audit accrual
Other taxes and social security costs Other creditors
The large increase in trade creditors at year end is detailed in note 5. 8 Retained surplus
At 1 February Profit for the year
At 31 January
9 Post balance sheet events
2021 2020
£ £
198,062 171,535
2021 2020
£ £
164,455 1,778 600 600 3,500 3,500 1,729 2,236 3,718 4,629 174,002 12,743
2021 2020
£ £
163,444 147,333 23,354 16,111
186,798 163,444
In the opinion of the Board, there are no adjusting or non adjusting events after the balance sheet date necessitating the revision of the financial statements.
The Board's operational income comprises the collection of an annual levy from licensed banks. Covid-19 has not impacted income as the Board has collected all expected levies for the next financial year 2021/22. In respect of the potential impact of Covid-19 on the banking sector in Jersey, the Board is in regular communication with the Jersey Financial Services Commission, the Government of Jersey and the Jersey Bankers Association and closely monitors the position. The Board exists to be ready to deal with compensation pay-outs in the event of a bank default and is mindful of the associated risks arising from the potential economic impact of the Covid-19 pandemic.
for the year ended 31 January 2021
10 Other financial commitments 2021 2020
£ £
At the year end the company had annual commitments under
non-cancellable operating leases as set out below:
Operating leases which expire:
within one year 154,467 - within two to five years 245,967 -
400,434 -
The operating lease relates to a software service contract (CMS Pro proprietary software) which is being provided over a term of 5 years from 1 January 2021.
11 Controlling party
In the opinion of the Board, there is no ultimate controlling party or beneficial owner meeting the definitions as prescribed by FRS 102.