The Jersey Financial Services Commission has signed an agreement with the UK's Financial Conduct Authority to secure continued access for its firms to the funds market on the mainland.

The relevant memorandum of understanding will ensure that Jersey’s investment funds industry will still be able to market its funds in the UK after that country leaves the European Union. The MoU will come into effect when EU law no longer applies in the UK, which could be due to a ‘no deal’ Brexit or at the end of any transitional period once the UK has left the EU on an agreed basis.

The agreement effectively replaces an existing MoU between the JFSC and the FCA, which was facilitated originally by the European Securities and Markets Authority in accordance with the Alternative Investment Fund Managers Directive or AIFMD, a law concerning the regulation of the managers of hedge funds, private equity, real estate funds and other alternative investment funds in the European Union. Jersey, which lies outside the EU, will maintain access to EU fund markets thanks to agreements that the JFSC has already signed with financial regulators in the majority of EU countries. Brexit will not affect these agreements.

The reason for the enactment of the new MoU is that when the UK leaves the EU, the old one will cease to be valid.

The MoU does not create any legally binding obligations, confer any rights, or supersededomestic laws. It is a statement of intent to consult, co-operate and exchange information in connection with the supervision and overseeing of alternative investment funds that operate across borders and the depositories of such funds. It complements, but does not alter, the terms of the IOSCO multilateral memorandum of understanding concerning consultation and co-operation and the exchange of information, which both jurisdictions have already signed. No domestic banking secrecy, blocking laws or regulations should prevent one regulator from helping the other.

The agreement also obliges each regulator to furnish the other one, on request, with help in obtaining information that might allow the requesting authority to verify that this-or-that firm from its country is obeying its laws and information relevant for monitoring an AIFM. It also obliges each regulator to hand over "information relevant to the financial operation and condition" of this-or-that firm (e.g. reports of capital reserves, liquidity and internal control procedures, financial statements, early warning notices) and regulatory reports.

Article 7 of the MoU states that the requesting regulator can use non-public information it obtains from the MoU solely for the purposes of supervising firms and seeking to ensure compliance with its laws and regulations. In view of the large discretion that prosecutors in the UK afford themselves when availing themselves of supposedly privileged information that originally came to light on regulatory visits, this guarantee might be called into question.