Financial Services
(General Insurance Mediation Business (Client Assets)) (Jersey) Order 2005
PART 1
PRELIMINARY
1 Interpretation
In this Order, unless
the context otherwise requires –
“approved bank”, in relation to an insurance broking
account, means –
(a) if
the account is opened at a branch of a bank which is a branch in Jersey –
a person registered under the Banking
Business (Jersey) Law 1991; and
(b) if
the account is opened at a branch of a bank which is a branch outside Jersey –
(i) an institution
authorized under the Banking Act 1987 of the United Kingdom, as in force
from time to time,
(ii) a
credit institution (as defined in Directive No. 77/780/EEC, the First
Banking Directive on the co-ordination of laws, regulations and administrative
provisions relating to the taking up and pursuit of the business of credit
institutions) established in any other Member State of the European Community
and duly authorized by the relevant supervisory authority in that Member State,
(iii) an
institution authorized under the Banking Act 1975 of the Isle of Man, as
in force from time to time,
(iv) an
institution authorized under the Banking Supervision (Bailiwick of Guernsey)
Law 1994, as in force from time to time,
(v) a building society
registered and incorporated under the Building Societies Act 1986 of the
United Kingdom, as in force from time to time, which operates a deposit-taking
business (within the meaning of the Banking Act 1987 of the United
Kingdom, as in force from time to time) without restriction,
(vi) a
bank which is a company in the same group as an institution described in paragraph (a)
or (b)(i) to (iv), or
(vii) any
deposit-taking business within the meaning of the Banking Business (Jersey) Law 1991 that is approved by the
Commission;
“bank” means any institution which lawfully carries on
deposit-taking business in the country in which it was established;
“business day” means any day other than a Saturday,
Sunday, Christmas Day, Good Friday or a day appointed as a public holiday or bank
holiday under Article 2 of the Public Holidays and Bank Holidays (Jersey)
Law 1951;
“client”, in respect of a registered person,
means –
(a) a
person who has entered into an agreement for the provision of services to be
provided by the registered person when carrying on general insurance mediation
business; or
(b) a
person who has received or may receive the benefit of services to be provided
or arranged by the registered person when carrying on general insurance
mediation business;
“default” means the commencement of –
(a) an
application for a declaration under the Bankruptcy
(Désastre) (Jersey) Law 1990; or
(b) liquidation
or any insolvency proceedings in any jurisdiction;
“designated account” means an insurance broking account
which –
(a) includes
either words in its title indicating that it is a designated account or other
information which sufficiently distinguishes it as such; and
(b) only
contains the money of a single client (or, in the case of 2 or more clients who
open an account jointly, those clients) whose written consent to the use of the
bank with which the insurance money is to be held has been obtained;
“insurance broking account” has the meaning assigned by Article 7(2);
“insurance company” has the meaning assigned by Article 1
of the Insurance Business (Jersey)
Law 1996;
“insurance intermediary” means an intermediary in
respect of insurance;
“insurance money” has the meaning assigned by Article 3;
“intermediary”, in relation to a registered person,
means a person –
(a) to
whom any insurance money held by the registered person has been passed for the carrying out of transactions on behalf of clients of the
registered person; or
(b) from
whom any money is owed to the registered person which, once received by the
registered person, will be insurance money for the
carrying out of transactions on behalf of clients of the registered person;
“Law” means the Financial Services (Jersey) Law 1998;
“money” includes cheques and other payable orders of any
currency;
“policy document” includes policy wordings, schedules,
certificates or similar documents evidencing a client’s entitlement to a
benefit or right under a general insurance contract;
“pooling event” has the meaning assigned by Article 15;
“protected account” means an insurance broking account
which is not a designated account;
“registered person” means a person registered under the
Law to carry on general insurance mediation business.
PART 2
INSURANCE MONEY
2 Application
of this Part
(1) This Part applies to
every registered person who holds money on behalf of his or her clients in an
account with himself or herself.
(2) This Part does not
apply to a designated account to the extent provided by Article 12.
3 Meaning
of “insurance money”
(1) Subject to paragraph (2),
insurance money is money which a registered person, in the course of carrying
on general insurance mediation business holds or receives (whether in
Jersey or not) in respect of any general insurance contract entered into, or to
be entered into, with or for a client, which money is –
(a) premiums,
additional premiums or return premiums;
(b) claims
or other monies due under contracts of insurance;
(c) refunds
or salvages;
(d) fees,
charges, taxes or similar fiscal levies relating to general insurance
contracts;
(e) all
forms of reserves under general insurance contracts and any adjustment to them;
or
(f) discounts,
commissions or brokerage.
(2) Cheques or payable
orders made payable to a client by a third party or to a third party by a
client are not insurance money.
(3) For the purposes of
this Article money is only to be regarded as due and payable in respect of fees
or commissions payable to the registered person if it may be withdrawn under Article 9.
4 Money
to be held in approved bank unless waiver applies
(1) A registered person
shall ensure that all insurance money in respect of his or her clients shall,
subject to this Order, be held at an approved bank.
(2) Paragraph (1) does
not apply in relation to insurance money if the Commission waives under paragraph (3)
the requirement in relation to insurance money received by a registered person.
(3) The Commission may, by
notice in writing to a registered person, waive the requirement for the
registered person to hold insurance money with a bank that is an approved bank,
if –
(a) the
insurance money relates to one or more general insurance transactions which are
subject to the law or market practice of a jurisdiction outside Jersey;
(b) because
of the applicable law or market practice of an overseas jurisdiction, it is not
possible to hold insurance money in an insurance broking account with an
approved bank; and
(c) the
registered person –
(i) obtains the
client’s informed consent, or
(ii) notifies
each relevant client and has a client agreement, or terms of business, which
adequately explain that –
(A) the
insurance money will be held with a bank that is not an approved bank,
(B) the
legal and regulatory regime applying to the bank with which the insurance money
will be held will be different from that of an approved bank and in the event
of the failure of the bank the insurance money may be treated differently than
it would be if the insurance money were held by an approved bank, and
(C) the
insurance money is held in a designated account at the bank.
(4) A waiver under
paragraph (3) –
(a) shall
specify the registered person to whom, and the bank to which, the waiver
relates; and
(b) shall
be subject to the following conditions –
(i) the money shall
be held with the bank in the overseas jurisdiction,
(ii) the
registered person shall hold money with the bank for no longer than is necessary
to effect transactions,
(iii) the
insurance money shall be held in a designated account,
(iv) any
other conditions that the Commission specifies from time to time in the waiver
or by notice in writing to the person to whom the waiver relates.
(5) The Commission may, by
notice in writing to a registered person to whom a waiver has been issued,
revoke the waiver, if the Commission is satisfied that –
(a) the
requirements of paragraph (3) for the issue of the waiver to the person
are no longer satisfied; or
(b) a
condition specified in or under paragraph (4) has not been complied with.
5 Segregation
of insurance money
A registered person shall pay into insurance broking accounts all
insurance money which the registered person holds or receives.
6 Accounting
for and use of insurance money
A registered person shall account properly and promptly for
insurance money and, in particular, shall ensure that –
(a) except as permitted by
this Order, insurance money and other money do not become mixed; and
(b) individual transactions
can be accurately identified and traced.
7 Insurance
broking accounts
(1) A registered person
authorized to hold insurance money shall, before receiving insurance money,
open one or more insurance broking accounts for the purpose of receiving that
money.
(2) An insurance broking
account is –
(a) an
account at an approved bank; or
(b) if
the Commission has issued a waiver under Article 4 in relation to
insurance money – an account containing the insurance money at the
bank specified in the waiver,
which account –
(i) holds
the money of one or more clients;
(ii) is
in the name of a registered person but has a title
which sufficiently distinguishes it from any accounts holding funds belonging
to the registered person;
(iii) includes
either words in its title indicating that it is an insurance broking account or
other information which sufficiently distinguishes it as an account containing
insurance money; and
(iv) is a
current or deposit account (or, if the bank is an approved bank that is a
building society within paragraph (b)(v) of the definition of
“approved bank” in Article 1, is a deposit (and not a share)
account).
(3) Except as provided by paragraph (4),
the insurance broking account shall not be operated until the registered person
has obtained from the bank in which the account is held an undertaking,
addressed to the registered person, that –
(a) all
money standing to the credit of the account is and will be held by the
registered person as trustee;
(b) interest
earned on the account will be credited to that account or to another insurance
broking account;
(c) the
bank is not, and will not be, entitled to combine the account with any other
account or to exercise any right of set-off or counterclaim or any security
interest against money in the account in respect of any debt or other
obligation owed to the bank by the registered person; and
(d) the
title of the account sufficiently distinguishes it as an account containing
insurance money and sufficiently distinguishes it from any account containing
money belonging to the registered person.
(4) The Commission may, by
notice in writing to a registered person, waive the requirement to obtain an
undertaking if –
(a) the
law to which the approved bank is subject makes it impossible or impracticable
to give the undertaking; or
(b) there
are other exceptional circumstances.
(5) A waiver under
paragraph (4) shall be subject to any conditions that the Commission
specifies from time to time in the waiver or by notice in writing to the person
to whom the waiver relates.
(6) If the Commission has
waived the requirement to obtain an undertaking, the registered person shall
explain to his or her clients the nature of the risks to which they may be
subjected because there is no such undertaking.
(7) If a registered person
transacting insurance mediation business intends to pass insurance money to
another insurance intermediary located outside Jersey, the registered person
shall advise the client that –
(a) insurance
money may be passed to another insurance intermediary outside Jersey; and
(b) if
the money is so passed, the legal and regulatory regime applying to the
insurance intermediary with which the insurance money will be held will be
different from that of an insurance intermediary located within Jersey and in
the event of the failure of the insurance intermediary the insurance money may
be treated differently than it would be if the insurance money were held by an
insurance intermediary in Jersey.
(8) A client to whom advice
is given under paragraph (7) by a registered person may notify the
registered person that the client does not wish the client’s money to be
passed to another insurance intermediary in a particular jurisdiction.
8 Payments
into insurance broking account
A registered person shall ensure that insurance money received by
the registered person shall be paid into an insurance broking account as soon
as possible and in any event no later than 3 business days after the day on
which the money is received.
9 Payments
out of insurance broking account
A registered person may withdraw money from an insurance broking
account in relation to a client only if –
(a) it is not insurance
money or it has been banked in error;
(b) it is properly required
for immediate payment to or on behalf of the client or the insurance company in
respect of the client;
(c) it is for or towards
payment of the fees or commission owed to the registered person by the client;
or
(d) it is properly
transferred to another insurance broking account or into a bank account in the
client’s own name that is not an account which is also in the name of the
registered person.
10 Interest
on insurance money
A registered person shall ensure that the name of the person who is
to receive any interest payments that may be received by the registered person
in relation to insurance money in respect of a client is specified in an
agreement in writing between the client and the registered person.
11 Reconciliation
of accounts
(1) A registered person
shall, at least once each month, reconcile the balance on each insurance
broking account, as recorded by the registered person, with the balance on that
account as set out in the statement issued by the bank covering the period in
respect of which the reconciliation is made.
(2) The reconciliation
referred to in paragraph (1) shall be performed within 10 business days of
the date to which the reconciliation relates.
(3) Any differences arising
in a reconciliation under paragraph (1) shall be corrected immediately
unless they arise as a result of differences in timing between the accounting
and settlement systems of the registered person and the bank.
12 Designated
accounts
(1) A registered person
shall not charge a client for any interest, fee or other payment that is
required to be paid because the client’s designated account is overdrawn,
unless the registered person has obtained the written consent from the client
to that account being overdrawn.
(2) Article 11(1)
shall not apply to a designated account if –
(a) the
client of that account has given his or her written consent to that paragraph
not applying in relation to him or her; and
(b) the
registered person has taken the steps that are necessary to ensure that the
balance on that account as set out in the statement issued by the bank agrees
with what the registered person reasonably believes the balance should be.
(3) A registered person
whose client has a designated account shall inform the client that the account
does not have the protection of Part 3.
PART 3
DEFAULT
13 Application
of Part 3
This Part only applies to protected accounts.
14 Creation
of statutory trust
(1) If insurance money is
held by a registered person in a protected account in the course of general
insurance mediation business, the insurance money is held on trust in
accordance with this Part –
(a) for
the clients for whom the money is held, according to their respective shares in
it;
(b) for
the insurance companies and insurance intermediaries for whom the money is
held, according to their respective shares in it; and
(c) after
all valid claims under sub-paragraphs (a) and (b) have been met, for the
registered person himself or herself.
(2) If money is held on
trust under this Part, the Trusts (Jersey) Law 1984 shall, subject to this Part,
have effect in relation to the money.
15 Meaning
of “pooling event”
(1) A pooling event
consists of the occurrence of any of the following –
(a) the
default of the registered person;
(b) the
default of any bank with which any insurance money held by the registered
person is deposited;
(c) the
default of an intermediary or insurance company;
(d) the
coming into force of a direction by the Commission under Article 23 of the
Law in respect of all insurance money held by the registered person, unless the
direction states otherwise.
(2) However, a pooling
event shall be deemed not to have occurred if, immediately after the default of
a bank or an intermediary, the registered person repays to his or her clients,
or pays into the insurance broking accounts of his or her clients, an amount
equal to the amount of insurance money held on behalf of those clients with
that bank or by that intermediary.
(3) If –
(a) a
registered person has placed insurance money with, or passed insurance money
to, a bank, intermediary, insurance company or third party;
(b) the
insurance money has not been returned to the registered person or the
person’s client; and
(c) the
bank, intermediary, insurance company or third party fails,
the registered person shall, as soon as reasonably practicable after
becoming aware of the failure, notify the Commission as to the failure and whether
or not the registered person intends to make good any shortfall that has arisen
or that may arise.
16 Destination
of insurance money on pooling event
(1) If a pooling event
occurs –
(a) except
in so far as money is received after the pooling event, the power of a
registered person to pay money into and out of protected accounts in which
insurance money is held is suspended; and
(b) subject
to Article 17, money held in all the registered person’s protected
accounts is pooled and shall be made available to meet the claims of clients in
respect of whom insurance money is, or should be, held in those protected
accounts, so that each client receives the same percentage of the amount of the
client’s claim.
(2) If, at the time when a
pooling event occurs, a registered person has paid an uncleared cheque or other
payable order into a protected account, when such cheque or order is cleared
the amount credited in respect of it shall be pooled in accordance with paragraph (1)(b).
(3) If, at the time when a
pooling event occurs, insurance money from a protected account is in the hands
of an intermediary, the insurance money shall, on its return to the protected
account, be pooled in accordance with paragraph (1)(b).
(4) If insurance money
referred to in paragraph (3) cannot be returned until one month after the
pooling event, the registered person may make distributions from the account
before that date if he or she makes provision for the possibility of such money
not being returned.
(5) Without prejudice to
any claim of any other person arising under this Order, if a surplus remains in
the pool created under paragraph (1)(b), the surplus shall form part of
the assets of the registered person.
(6) If a registered person
receives money from a client after a pooling event which, but for that event,
would fall to be paid into a protected account –
(a) the
registered person shall ensure that the money is placed in a new insurance
broking account opened after that pooling event; and
(b) the
money shall not be pooled with the money held in the registered person’s
protected accounts at the time of the pooling event.
17 Money
held by third parties
If insurance money is held by a bank, an insurance company or an
intermediary, who defaults or, following a pooling event, fails to recognize
that the money is held on trust in accordance with this Part –
(a) the money shall be
pooled separately and the registered person shall ensure that –
(i) the
money is made available to satisfy the separate claims of the separate clients
so that each client receives the same percentage of the amount of the
client’s claim, and
(ii) after
the claims described in sub-paragraph (i) have been satisfied, the money
is paid into the pool created under Article 16(1)(b); and
(b) the registered person
shall apply the pool created under Article 16(1)(b) –
(i) to
meet any claims of separate clients that are not separate claims and the claims
of other clients (all ranking equally), and
(ii) after
the claims described in sub-paragraph (i) have been satisfied, to meet any
unsatisfied separate claims of separate clients.
18 Default
officer
(1) The Commission may
appoint a person, to be known as the default officer, to administer the
application of this Part in relation to a registered person in the event of the
default of the registered person or the coming into force of a direction by the
Commission in respect of all insurance money held by that person.
(2) The registered person
and his or her clients shall provide the default officer with the assistance
that the default officer requests be provided.
(3) A certification by the
default officer as to –
(a) the
value of any claim or of any amount pooled in accordance with Article 16(2);
or
(b) the
amount of payments to be made,
shall, in the absence of manifest error, be conclusive.
(4) The default officer may
withdraw, amend or revise his or her certifications at any time but no client
who has received payment under such a certificate shall be required to repay
any sum.
(5) The default officer
shall report on his or her actions to the Commission and shall comply with any
directions it may give the default officer so as to comply with this Order.
PART 4
MISCELLANEOUS
19 Policy
documents
If policy documents are held by a registered person on behalf of his
or her clients the registered person shall –
(a) hold the policy
documents in his or her own possession and in safe custody and shall not part
with possession of them to any person other than the client or in accordance
with the client’s instructions;
(b) if the title to the
documents passes by delivery, hold them in such a manner that the person
entitled to receive the benefit or right under a policy document can be
identified at all times; and
(c) if some of the
documents are held –
(i) as
security for a loan to that client, or
(ii) as a
form of security, guarantee or indemnity provided by way of security for the
discharge of any liability arising from transactions effected by the registered
person with or for that client,
ensure that the documents can be identified and distinguished from
those which are not so held.
20 Exemptions
(1) This Order does not
apply in relation to a person if the person is exempted by the Commission under
this Article from the application of this Order.
(2) A person may apply to
the Commission for exemption from the application of this Order.
(3) The Commission may,
after receiving from a person an application under paragraph (2), exempt
the person from the application of this Order if the Commission is satisfied
that the person is an appropriately regulated person within the meaning of
paragraph (4), (5), (6) or (7).
(4) A person is an
appropriately regulated person if the person is –
(a) authorized
to carry on general insurance mediation business under the Financial Services
and Markets Act 2000 of the United Kingdom, as in force from time to time;
(b) an
appointed representative of an insurance company, or of an insurance
intermediary, that is authorized under the Financial Services and Markets
Act 2000 of the United Kingdom as in force from time to time;
(c) an
appointed representative of an insurance company that is authorized under the Insurance Business (Jersey) Law 1996; or
(d) an
appointed representative of an insurance intermediary that is authorized under
the Law.
(5) A person is an
appropriately regulated person if the person is –
(a) registered
or otherwise authorized to carry on general insurance mediation business under
an enactment, as in force from time to time, of a country or territory other
than the United Kingdom or Jersey;
(b) regulated,
in respect of his or her carrying on general insurance mediation business, by a
regulatory body of that country or territory; and
(c) in
respect of his or her carrying on general insurance mediation business, subject
to a regulatory regime that is sufficient to ensure that no person is liable to
be placed at undue financial risk by virtue of the person being exempted from
the application of this Order.
(6) A person is an
appropriately regulated person if the person is –
(a) the
agent of a principal;
(b) registered
or otherwise authorized to carry on general insurance mediation business under
an enactment, as in force from time to time, of a country or territory other
than the United Kingdom or Jersey; and
(c) in
respect of his or her carrying on general insurance mediation business, subject
to a regulatory regime that is sufficient to ensure that no person is liable to
be placed at undue financial risk by virtue of the person being exempted from
the application of this Order.
(7) A person is an appropriately
regulated person if –
(a) the
person is the agent of a principal;
(b) the
principal is registered or otherwise authorized to carry on general insurance
mediation business under an enactment, as in force from time to time, of a
country or territory other than the United Kingdom or Jersey; and
(c) the
principal is, in respect of his or her carrying on general insurance mediation
business, subject to a regulatory regime that is –
(i) imposed and
supervised by a regulatory body of the country or territory in which the
principal is registered or authorized, and
(ii) sufficient
to ensure that no person is liable to be placed at undue financial risk by
virtue of the person being exempted from the application of this Order.
(8) The Commission may
revoke an exemption in relation to a person if the Commission is no longer
satisfied that the person is an appropriately regulated person within the
meaning of paragraph (4), (5), (6) or (7).
21 Citation
This Order may be cited as the Financial Services (General Insurance
Mediation Business (Client Assets)) (Jersey) Order 2005.