Consultation Hub

We asked for feedback on proposals to revoke the Licensees (Conduct of Business and Notification) (Non-Guernsey Schemes) Rules 1994 (“the NGS Rules”) made under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 (the “PoI Law”).

Seven responses were received from a cross section of industry.

Below is a summary of the feedback received, which is immediately followed by the Commissions response.

Q1: Do you have any comments on the proposed revocation of the Non-Guernsey Scheme Rules? 

All respondents supported the revocation of the NGS Rules.

Commission response

The Commission welcomes respondents’ support for the proposal and the NGS Rules are to be revoked. The effective date of the revocation shall be 11 May 2021 and from this date licensees will no longer be required to notify the Commission of, and seek prior approval for, a proposal to carry on the activities of management, administration or custody in connection with a specific non-Guernsey collective investment scheme. It will, of course, continue to be a requirement that such activities, when conducted by way of business in or from within the Bailiwick, are conducted by persons licensed under the PoI Law.

Q2: Do you have any views on the inclusion of additional data requests in the licensee’s annual return?

Respondents were supportive of the proposal to request additional annual data. One respondent noted that clear definitions and guidance would aid accurate and consistent reporting, while another highlighted the need for any additional data request to be reasonable and not too onerous to provide.

Commission response

The Commission has noted the comments provided and will engage further with licensees on specific proposals for changes to data reporting later in the year.

Q3: Please provide any further comments you may wish to share with respect to the proposals as set out in this consultation paper.

One respondent asked whether the revocation of the NGS Rules will result in automatic cancellation of NGS permissions under the PoI Law for licensees.

No further significant comments were made.

Commission response

Revocation of the NGS Rules will revoke the requirement for specific approval before providing services to a Non-Guernsey Scheme. Approvals previously granted will therefore no longer be required.

The Commission has made rules revoking the NGS Rules from 11 May 2021.

This modification to the PoI Law framework represents risk based de-regulation. This step will make it quicker and less costly for firms to take on new overseas funds as clients while still ensuring that such activity falls firmly within the scope of the Bailiwick’s international standards-compliant regulatory regime.

Next Steps

With the revocation of the NGS Rules the reporting of quarterly statistical data for Non-Guernsey Schemes will no longer be required. Over the course of the next year, the Commission will engage further with licensees on additional data reporting under the PoI Law, including for example the number and value of open-ended and closed-ended Non-Guernsey Schemes and other relevant data.

We asked for feedback on a number of legislative proposals for regulating firms involved in lending, credit and finance.

Responses were received from a cross section of industry, trade associations, consumer and business groups/committees. 

Feedback was also obtained from attendees of presentations and one to one meetings with various stakeholders conducted on the content and subject matter of the Consultation Paper.

Overall the consultation has highlighted evidence of support, a willingness by stakeholders to continue to be involved and helpful suggestions to further the foundation built so far. 

The majority of the feedback was supportive or strongly supportive of the proposals for the legislative and regulatory approach set out in the Consultation Paper.  The inclusion of indicative rules in the Consultation Paper was highlighted as being particularly useful in helping to make recommendations to strengthen the proposals.  We will consult again as the development of the rules and regulations evolve.  

Respondents strongly agreed with the need for the Bailiwick to provide financial consumer protection. This is evidenced through the suggestions made to improve the proposals outlined in the Consultation Paper.  It is further endorsed through recognition that the introduction of financial consumer safeguards can be a competitive advantage, which could be marketed to enhance customer propositions.

There was positive encouragement on the innovative financial aspects of the consultation.  Comment included recognition of the advantages gained through surety of the Commission’s technology neutral regulatory position.  Knowledge and clarity of the regulatory stance regarding technology was seen as an enabler for consideration of investment to raise and enrich market competiveness.  In response to this observation the Commission plans to highlight its willingness to use the Innovation SoundBox as a means through which the use of innovative financial technology can be discussed and approved. 

At this stage we are heartened by the positive attitude to the proposals and the continuing support to progress development.  Expressions of encouragement included:

• The  legislative and regulatory framework should encourage competition and growth;
• Strong support for the consumer financial credit proposals;
• Encouragement to implement a framework that portrays a positive approach towards progressing advances in the use of technology and the digital sector;
• Support for enabling proposals that would be applicable to all lending, credit and finance businesses; and
• Agreement with the proposal to repeal the NRFSB Law.

The following is a summary of the key points extracted from the consultation responses including instances where as a result of respondent recommendations modifications have been made to the original design:

• The Regulated Activities Officer (“RAO”) does not need to be a Bailiwick resident only a senior official who is principally involved in the firm’s lending and credit activities;
• Ensure consumers clearly understand the financial commitment and the terms, including fees, charges, interest, repayment requirements, early settlement and any other key factors;
•  Protection against financial harm to consumers which will include clear and understandable controls relating to financial promotions and marketing, including for example publication of an APR;
• A recommendation to include an appeal process should a licence not be granted;
• An ability for applicants to demonstrate that they are operating in a jurisdiction with equivalent legislation and therefore achieve deemed compliance;
• Define terminology through inclusion of definitions or guidance;
• Clarify low risk activities and those activities which the framework is not intended to cover;
• Enable identification of businesses offering or entering into regulated credit agreements (or offering ancillary services in relation to those agreements) which will require regulation; and
• Include a right to cancel / cooling off period other than for where the circumstances make it impracticable to do so.

We would like to thank everyone who responded to the Consultation Paper and to those who participated and contributed at the various stakeholder engagement events.

The feedback received has played a helpful role in the LCF Project’s development.  The suggestions, and recommendations evidence a determination by business and consumer alike to implement a framework that stimulates growth and expansion while retaining practical and proportionate consumer financial protection.

Next Steps

The Consultation Paper sought to formulate a legislative framework which (1) promotes growth in respect of lending, credit and financial services, (2) provides compliance with international AML/CFT standards and (3) protects the interests of the consumer.  The support expressed demonstrates confirmation to further progress the Project objectives.  The next stage is for the Commission to liaise with relevant civil servants who will advise the Committee for Economic Development (“the Committee”) and the Policy & Resources Committee (“PRC”) in respect of the same.  It is envisaged that the Committee and PRC will then consider and, if felt appropriate approve a Policy Letter to be presented to the States of Guernsey, again for approval, asking the Law Officers of the Crown to produce a Projet de Loi giving effect to the proposals. 

Please note

This feedback statement is a project working document that summarises responses received to the LCF Consultation Paper.  The comments do not prejudge any final decision to be made by the Committee or the States of Guernsey.