Consultation Paper on Proposals to Create a Single Fiduciary Handbook

Results updated 18 Feb 2020

Feedback statement on Fiduciary Rules and Guidance

 

We asked

We asked for feedback on proposals to consolidate and modernise rules and guidance applying to licensees under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000 (the “Fiduciaries Law”).

24 responses were received from a cross section of industry, trade associations and other industry participants. 

Further feedback was also obtained from 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 industry’s strong support of, and engagement with, the regulatory policy development process and it is hoped that this will lead to positive outcomes for both customers and providers of fiduciary services. 

 

You said

The majority of the feedback was supportive of the overall aims of the proposed revision to the framework set out in the Consultation Paper. 

The majority of feedback received addressed matters of interpretation, scope of application, challenges with practical application of the proposed rules or matters of drafting detail.

 

We did

We are pleased to say that we have been able to address the majority of feedback received in drafting the final version of the Rules.

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

• The title of the consolidated document has been changed from “Handbook” to “Rules and Guidance” to avoid the possibility of confusion with the Handbook on Countering Financial Crime and Terrorist Financing;
• The rules around client money have been revised to more clearly distinguish the treatment of money held by the licensee and client money under the control of the licensee, the treatment of pooled accounts has been clarified, a more risk-based approach to reconciliation has been introduced and further guidance around the rule prohibiting directly profiting from holding client money has been added;
• The record retention requirements have been amended to introduce a minimum retention period of six years or a higher period in line with applicable law;
• The scope of Financial Resource Requirement Rules has been changed to reflect that these remain applicable only to lead licensees;
• A definition of “outsourcing” has been provided and additional guidance added explaining that contingency planning does not require maintenance of additional redundant resource capacity;
• The trigger level for certain data-related notifications to the Guernsey Financial Services Commission(“GFSC”) has been adjusted to ensure the appropriate level of communication with the GFSC while avoiding over-burdensome reporting;
• Rules relating to appropriate complaints handling have been amended to make these easier to understand; and
• It remains a requirement that licensees must ensure that clients are informed of terms of business but the previous drafting suggesting that this must include a personal discussion has now been removed.

A number of further, less material amendments have been made to the draft in response to consultation responses received.

Other comments were received and carefully considered where the decision was taken to retain the drafting consulted upon, for example:

• One respondent expressed the view that the Rules may conflict with the provisions of the Trusts (Guernsey) Law 2007 (the “Trusts Law”). We note that the rules relating to licensee’s consideration of clients’ best interests are materially unchanged on the provisions in the current Codes of Practice. We remain respectful of the jurisdiction of the Court with regard to the Trusts Law.
• Some respondents sought further amendment to the Financial Resources Rules. These specific rules were included within the new document as part of the consolidation process, largely unchanged on the current version of the rules in force, the rules having been amended as recently as 2018. There is no plan to revise these rules at this time. It should be noted that in limited, specific circumstances the Commission may use its discretion to make derogations where it is satisfied that there is no increase in prudential risk.

We would like to thank everyone who responded to the Consultation Paper. The feedback received has played a helpful role in the development of a framework that seeks to be practical and proportionate while supporting the integrity of the sector.

Next Steps

The GFSC considers that that the provisions of the new Rules broadly reflect the current practices of the licensed sector but nevertheless, in line with the requests of respondents to the consultation, a reasonable period of time will be allowed for licensees to take any necessary steps to ensure compliance with the Rules. Licensees will therefore be required to comply with the provisions of the Rules from 1 January 2021. In due course the GFSC will host stakeholder feedback sessions on the new Rules highlighting significant changes and providing an opportunity to address further specific queries.

 

Links:

• The FIduciary Rules and Guidance 2020