“There were carve outs in our remit designed into the law,” Melville told International Adviser.
“We don’t look at most investment funds, only the ones that are strictly limited to retail distribution. If they are sold through an IFA and there is investment advice involved, on Jersey that would be in our mandate.
“At the moment in Guernsey it would not, but that is under review, currently,” he said.
Melville relocated from Canada to Jersey in June 2015 to set up the ombudsman service, it having been 17 years in discussion.
Lumiere
The mis-selling of Guernsey-based Providence funds by Jersey IFA firm Lumiere Wealth was not the driving force behind the review but was a “relevant piece of it”, Melville said.
“We are an early warning system for issues the regulator may not be aware of, or are unaware of the extent of the impact it is having on a jurisdiction.”
The local regulatory complexity is such that not everyone knows “what is in and what is out”. As ombudsman, Melville said: “I need that clarity, and so does industry.”
Massive and global
Having joined the Canadian ombudsman service in 2006 and run the office from 2009 to 2015, Melville said the move to Jersey, “professionally, has been a fascinating change”.
The original expectation had been 700 complaints a year but “in the first year there were around 1,400.”
While the region is small, the financial sector is “massive” in comparison “and the clientele is very global”.
“Complaints thus far have been about a third local, a third UK, a third international,” coming from South Africa, Thailand, the Middle East and North America.
Banking complaints comprise the bulk of the ombudsman’s work but the “most challenging complaints” come from the investment sector.
“Three-quarters of complaints relate to unsuitable investment advice. But that is what I had in Canada, too.”
