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Impact of the 2026 Civil Penalty changes implemented by the Government of Jersey

Major changes to the legislation empowering the Jersey Financial Services Commission (JFSC) to impose civil penalties came into force on 12 of March 2026 and could have a significant impact on the approach adopted by the Jersey regulator.

Barry Faudemer
Baker Regulatory CEO

Government of Jersey to receive a share of civil penalties

For the first time, the Government of Jersey will receive a percentage of fines imposed by the JFSC.  This amount will be calculated following the deduction of JFSC enforcement costs and a portion of the penalty fine (of up to 30%) being applied to offset future regulatory fees for that class.

The JFSC also now have a statutory responsibility to report to the States on the following:
[a)     the number of penalties imposed under Article 21A of the Law;
(b)     the total amount received from penalties imposed under that Article;
(c)     the total amount received from penalties imposed on each class of registered person;
(d)     the total costs of enforcement incurred by the Commission, excluding the costs of staff and premises (“costs of enforcement”); and
(e)     the amount the Commission proposes to offset against fees for each class of registered person in accordance with Article 21G(2) of the Law, which must not exceed 30% of the fees received from that class of registered person for the period concerned.
The Minister must notify the JFSC, within 60 days after receipt of the report, of the amount to be paid to the States.

Historically, civil penalties could be used to discount fees from the sector from which they were collected. That benefit has now been eroded by the latest amendments and the concept of the ‘good’ not paying for the ‘bad’ has been significantly diminished. It will be interesting to see if the changes will have long term impact, for example whether the JFSC might face political pressure to up its fining rate and increase Government revenue or whether the obligation to pass revenue to government will make the regulator more cautious in imposing penalties. It remains to be seen if the performance of the Director General or Commissioners in applying civil penalties and raising such revenue becomes a consideration when Ministerial approval is needed for a reappointment.

The costs of enforcement are not defined (other than excluding costs of staff and premises) in the changes and it will also be interesting to see if it extends to the cost of contesting Judicial Review proceedings or other unforeseen enforcement costs like using the services of a forensic accountant. Such costs will need to be included in the annual report and open to debate in the house.

Changes to financial penalty levels for registered persons

Further changes to the levels of financial penalty also come into force with the Financial Services Commission (Financial Penalties) (Jersey) Amendment Order 2026.  For registered persons the band 1 penalty cap is increasing from £10,000 to an eye watering £100,000.  But it’s not all bad news; the cap for band 2 (failing to rectify a breach) and 2A (negligent commission of a breach)  has now been reintroduced at £4,000,000. The turnover figures remain unaltered. We have yet to see any civil penalty approaching any of the caps as set out below.

  • For a band 1 breach the extent of the penalty is now limited to the lower of 4% of the average annual turnover or £100,000.
  • For a band 2 breach the extent of the penalty is limited to the lower of 6% of the average annual turnover or £4,000,000.
  • For a band 2A breach the extent of the penalty is limited the lower of 7% of the average annual turnover or £4,000,000.
  • A band 3 breach remains unaltered and is limited to 8% of the average annual income with no monetary cap.

Monetary caps applicable to principal persons, key persons, or person who performs or performed a senior management function remain unchanged. This is despite evidence that the changes have disincentivised individuals to take up such roles and created a compliance recruitment crisis.

What does this mean for industry?

Civil penalties are here to stay and Government, with dwindling financial resources, may be tempted to exert subtle pressure for the JFSC to impose penalties to generate a revenue stream.  While the JFSC has the ability to resist such political pressure, this dynamic places what should be an independent regulator in position of tension. The recent record breaking civil penalty imposed by the Guernsey  Financial Services Commission of  £1,960,000 in March 2026 against Utmost Worldwide Limited, the largest penalty ever imposed in Guernsey  for serious anti-money laundering and corporate governance failures over a decade will no doubt add to the pressure for Jersey to swell the Government coffers.

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