Jersey regulator forced to reconsider after revoking firm's registration
Jersey Financial Services Commission (JFSC) will have to look again at its decision to revoke the registration of to SWM Ltd as an investment business after a court said it needs to reconsider the sanction.
The JFSC revoked SWM's registration as an investment business in August 2018 following concerns over the quality of the advice SWM was giving to its clients in respect of two alternative investment funds.
In the formal Notice of Revocation, the regulator said that the company was not "a fit and proper person to be registered" as they had displayed a "lack of competence" by not maintaining and following appropriate procedures for advising clients, failing to maintain adequate insurance and handle complaints properly and receiving prohibited third party payments, as local news outlet Bailiwick Express reports.
This remains a matter of serious concern for the JFSC and we will need to consider carefully the sanction we might impose on the firm in light of the judgement"
SWM appealed that decision before Royal Court Commissioner, Sir Michael Birt. In its judgment, the Court ruled that "...the decision of the Board was very different from that recommended by the Executive."
"The Board made no finding of mis-selling (by which we mean giving unsuitable advice as a result of a lack of satisfactory due diligence)," they noted, adding that the Board had confined its conclusion to the fact that there were no appropriate written procedures in relation to due diligence.
The Court - which noted in its judgement the "antagonistic relationship" between SWM and the Executive branch of the JFSC - ruled that it was unreasonable of the Board to conclude SWM had shown a lack of integrity in some areas, although they agreed with other findings relating to complaints, procedures and insurance.
They quashed the revocation and asked the JFSC's Board to reconsider the sanction "in the light of the findings" contained in the judgment.
In the response, Martin Moloney, JFSC Director General, said: "The judgement has upheld the majority of the JFSC's factual findings and concerns around the firm's competency and integrity, while identifying the need to re-visit one of our conclusions in relation to this case. This remains a matter of serious concern for the JFSC and we will need to consider carefully the sanction we might impose on the firm in light of the judgement. No one should misunderstand the Royal Court's judgement.
"It does not in any way diminish the emphasis we have placed on the seriousness of the firm's failings. We treat such failings as extremely grave and failings of integrity as particularly difficult for firms to remediate."
The decision is the third time the Court has ruled in favour of SWM Limited, one of the very few firms to have successfully challenged the Jersey Financial Services Commission (JFSC) through the Courts.
(This article has been updated to reflect that the firm in question is SWM Ltd and not Stenham Wealth Management. Apologies to our readers and Stenham Wealth Management)
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