Last week, Ed Shorrock and James Sheedy of specialist litigation and dispute resolution practice Baker & Partners delivered a Breakfast Briefing on conflicts of interest to one hundred members of Jersey’s legal and financial community.
The briefing examined the inherent conflicts in the offshore trust model, with Director of Regulatory Services Ed Shorrock exploring the regulatory requirements of the JFSC and Financial Service Businesses, alongside the Commission’s findings concerning the deficiencies in management of conflicts of interest over the past five years. He explained how conflicts are not always obvious and how Financial Service Businesses need to take a broader view of what constitutes a conflict of interest.
Senior Associate James Sheedy elaborated on the nuances of potential and actual conflicts of interest in trust structures, giving examples of real cases where trustees have been found to have knowingly or unwittingly operated with an undeclared conflict of interest. James also examined the consequences of conflict, including personal liability on the part of the trustee to account for any profit accruing, and complications involved in a trustee’s resignation from trusts.
Ed Shorrock commented:
“The question of conflicts of interest is undoubtedly a complex one, especially in Jersey where the sophistication and complexity of the financial services industry can lead to conflicts of interest arising, often unwittingly. What is crucial, and what I hope the Breakfast Briefing helped to achieve, is that Financial Service Businesses are clear on what the regulator requires in this area.”
James Sheedy commented:
“It is essential that trustees and financial service businesses address the question of potential and actual conflicts of interest as early as possible, as the later a conflict comes to light, the more severe the consequences for the trustee. This obviously necessitates being clear on what exactly constitutes a conflict of interest, which requires a broad view. While not all conflict necessitates declining to act on the part of the trustee, they do necessitate clear and careful documentation and treatment, and I hope the Breakfast Briefing demonstrated this.”