Guernsey’s Financial Services Commission (GFAC) has published a Consultation Paper setting out the Commission’s Rules and approach for regulating the sectors covered by The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022.
The Commission is seeking feedback on its proposed Rules and approach.
The purpose of the new Law, which was passed by the States of Guernsey on 14th July 2022, is to protect customers in the Bailiwick who make use of consumer credit in all its forms, including individual loans, home finance and credit for the purchase of goods and services.
Firms offering or intermediating such services in or from within the Bailiwick will need to be licensed and will be regulated accordingly.
The Consultation Paper sets out, using worked examples, the scope of the licensing regime and how different sectors will be treated once the regime comes into effect. For example, in most cases, motor traders facilitating finance arrangements will be required to have a licence.
Retailers offering credit in their own right will require a licence, but in most circumstances, high street retailers offering credit from a third party lender will not be required to have a licence.
In addition the Law and accompanying Rules covers Fintech platforms operating crowdfunding and peer to peer platforms as well as virtual asset service providers, which are often referred to as ‘VASPs’. It introduces licensing for a wide range of activities related to crypto. Individuals holding virtual things like crypto instruments solely for investment purposes will not need to be licensed. Guernsey is introducing these Rules, in part, to ensure it remains compliant with the published expectations of the Financial Action Task Force which has set out detailed
guidance on how countries must act to stop crypto being used for criminal purposes.
The Law will also replace the existing Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008, and introduce instead the licensing and regulation of ‘financial firm businesses’.
In drafting the Rules, the Commission say that they have engaged extensively, meeting more than 50 firms individually, many more individuals, and holding a number of breakfast presentations for different industry groups. In issuing this consultation, the Commission continues to seek feedback from a wide range of stakeholders, including consumers and potential licensees. This will assist the Commission in developing its supervisory approach.
The consultation runs for 8 weeks from today, during which time the Commission will be holding a number of meetings with stakeholders to address any questions they may have before responding to the consultation.
