Consultation Paper on the Codes and Guidance Documents proposed to be re-issued under The Protection of Investors (Bailiwick of Guernsey) Law, 2020, The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020, The Banking Supervision (Bailiwick of Guernsey) Law, 2020, The Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020, The Insurance Business (Bailiwick of Guernsey) Law, 2002 and The Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002

Closed 26 Jul 2021

Opened 10 Jun 2021

Results updated 6 Oct 2021

We asked

We asked for feedback on the Codes and Guidance Documents which the Commission proposes to re-issue under the new and revised Supervisory Laws and the associated amended Rules and Regulations, as part of the wider “Revision of Laws” project.

In revising the Codes and Guidance Documents, we did not seek to introduce any significant policy changes, but rather, we tried to limit the changes to those required to retain consistency with the new and revised Supervisory Laws and the amended Rules and Regulations to be made under those Laws. The substance and meaning of the Codes and Guidance Documents is intended to remain the same. This approach of minimal change has the added benefit that it should help limit the administrative burden on users of the Codes and Guidance and limit the need to make extensive changes to their policies and procedures.

As set out in the Consultation Paper, several sets of Codes and Guidance Documents did not require any revision, and it was also proposed that certain obsolete documents be removed and archived.

Given the minimal changes proposed, the Commission did not anticipate a large volume of responses but was pleased to be able to offer the opportunity for industry participants and other interested parties to respond, where they considered it to be appropriate.

You said

A total of eight parties responded directly using the Commission’s On-line Consultation Hub, and a further respondent sent in their comments by email. Overall, there were very few suggestions for changes to the proposed documents (please refer to the following sections), and indeed, the majority of respondents had no comments to make on most of the revised documents.  No respondents voiced any objections to the proposed removal and archiving of the obsolete documents.

From the responses received the Commission therefore considers that industry is largely supportive of the proposed revisions.

We did

The following is a summary of certain points where, as a result of the consultation process and respondents’ suggestions, changes have been made to the documents in the original proposals.

It was pointed out that some of the current documents are either undated or the date is not recorded in a consistent place or manner across all documents.  For consistency and ease of reference, the month and year of issue has now been added to each revised document.

Other respondents highlighted a limited number of instances where the documents, incorrectly, still referred to the current Law and Rules, or used terms which will be superseded in the new and revised Law and Rules.  The Commission is grateful to those respondents for highlighting these oversights and has updated the documents accordingly.

Other suggestions were received however where, after careful consideration, it was decided to retain the current drafting or to adopt a slightly different approach to that suggested and these are further described below.

One respondent suggested that the Guidance Documents for Qualifying Investor Funds, Private Investment Funds and Registered Collective Investment Schemes could be amalgamated into one document, in order that areas in common would not need to be duplicated, but that content which is specific to each regime could be included in separate sections of the document.  Whilst the Commission can understand the rationale behind this suggestion, such changes are beyond the scope of this specific exercise. Furthermore, although each of these are fast track regimes, they are also all very separate and distinct regimes, each with their own characteristics – we take the view that retaining separate Guidance Documents for each helps maintain that distinction.

Another respondent suggested adding a section to the Change of Designated Person Guidance Document to cover Guernsey Green Funds.  Again, whilst we understand the rationale behind this suggestion, it should be remembered that the Guernsey Green Fund regime takes the form of an overlay over other Guernsey regulated fund regimes, and as such, a Guernsey Green Fund may take many different forms, the requirements and processes relating to a change of Designated Person for each of which might not be the same.   For this reason, we have simply added a paragraph to the revised Guidance Document, advising that in the event of a proposed change of Designated Person for a Fund which is also a Guernsey Green Fund, that the licensees should contact the Commission at an early stage to discuss the relevant requirements on a case-by-case basis. 

In respect of the Guidance Note on Managed Trust Company Relationships, one respondent suggested that the expectation voiced in the guidance that a Managed Trust Company should notify the Commission where notice to terminate the management agreement has been given, should be specifically stated in the relevant rules.  The scope of this particular consultation centred upon revising the extant Codes and Guidance Documents, rather than contemplating changes to rules. However, in any event, the Commission’s view is that this point is already sufficiently covered by rule 5.2 of the amended Fiduciary Rules, which is referred to in the revised Guidance Document. The Commission therefore does not propose to amend the rules in this respect at this time.  

We would like to thank everyone who responded to the Consultation Paper.  The feedback has played a helpful role in finalising the revised Codes and Guidance Documents.

Next Steps

The Commission has published the revised Codes and Guidance Documents and the amended Rules and Regulations and these can be found here. The revised Codes, Guidance Documents, Rules and Regulations will come into force on 1 November 2021.

Overview

 
 

 

Revision of Laws Project

In August and September 2020, the States of Guernsey, the States of Alderney, and the Chief Pleas of Sark, as part of a review of the legislation governing the finance industry, approved the following –

  • The Protection of Investors (Bailiwick of Guernsey) Law, 2020 (the “POI Law”);
  • The Banking Supervision (Bailiwick of Guernsey) Law, 2020 (the “Banking Law”);
  • The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020 (the “Fiduciaries Law”); and
  • The Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020.

The amendment Ordinances to the Insurance Business (Bailiwick of Guernsey) Law, 2002 (“IBL”), and The Insurance Managers, and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 (“IMIIL”) are currently awaiting consideration by the States of Guernsey (the amendment Ordinances together with the new laws set out above are the “New and Amended Laws”).

These New and Amended Laws form the suite of legislation contemplated in the Policy Letter on the Revision of the Financial Supervisory and Regulatory Laws which was debated and approved by the States of Deliberation on the 30th of October 2015.

As part of the Revision of Laws project, the Commission undertook extensive public consultation and engagement on revising the Bailiwick’s supervisory and regulatory laws to maintain the Bailiwick’s reputation as an efficient and well-regulated international finance centre.  This commenced in 2014 with the ‘Discussion Paper on the Revision of Laws Project: Revising the Bailiwick’s financial and regulatory laws to maintain the Bailiwick’s reputation as an efficient and well-regulated international finance centre’ and was followed, in 2015, by the ‘Consultation Paper on the Revision of Laws project’. Additionally, the Commission has undertaken extensive direct engagement with government and industry bodies on the New and Amended Laws arising from the Revision of Laws project.

The New and Amended Laws update the provisions of the previous laws and

  • bring them in line with current appropriate international standards;
  • improve consistency between the Regulatory Laws;
  • consolidate all enforcement powers, previously found across the laws, into the newly enacted Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020.

On 21 April 2021 the Commission issued consultation papers on proposals to issue and re-issue Statutory Instruments under the New and Amended Laws. Under these proposals, the substance and meaning of the Statutory Instruments, and the way in which they operate, is intended to remain the same but the language used would be updated, making it consistent with the New and Amended Laws and there would be harmonisation of the layout and numbering across the rules and correction of minor drafting errors. The consultations on Statutory Instruments amendment will close on 17 June 2021.

Changes to Codes and Guidance Documents

The Commission has reviewed Codes and Guidance Documents currently in issue with the objective of ensuring that the regulatory framework will continue to function correctly upon implementation of the New and Amended Laws. 

The Codes and Guidance Notes considered, as part of this review project, are listed at Appendix 1.

Consistent with the Commission’s objectives, the proposals in this Consultation Paper are designed to enhance the levels of confidence and security in the Bailiwick’s regulatory and supervisory framework.

Purpose

This Consultation Paper focuses on the Codes and Guidance Documents to be issued under the New and Amended Laws and may be regarded as complementary to the consultation papers issued on Statutory Instruments on 21 April 2021.

The purpose of this Consultation Paper is to seek feedback from all interested parties on the changes to be made in order to successfully implement the New and Amended Laws.  The objective is to ensure that the regime continues to be both compliant with international standards and appropriate for the Guernsey market.

In preparing these new draft amended Codes and Guidance we have sought to minimise changes to reduce the administrative burdens on licensed entities who will use them.  We are also taking the opportunity to remove obsolete Codes and Guidance Documents.

The draft Codes and Guidance Documents (provided in versions with tracked changes for ease of reference) and those currently in issue are accessible on the Commission website and can be viewed through the hyperlinks in this paper.

This Consultation Paper is a working document and does not prejudge any final decision to be made by the Commission.

 

Codes and Guidance Not Requiring Amendment

There are a number of guidance notes and codes for which it is proposed that no amendments are made. With respect to this guidance or codes the Commission proposes the following:

Principles of Conduct of Finance Business

This document remains relevant and no changes are proposed.

The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020

Guidance Notes for 124, Fiduciary Annual Return Full Fiduciary

Guidance Notes Form 127 – Pension Scheme or Gratuity Scheme Annual Return

This guidance will be amended to coincide with any future amendments to the Annual Returns.

Insurance Business (Bailiwick of Guernsey) Law, 2002

Guidance in respect of requesting disclosure derogation under FRS103

Guidance Note for Licensed Insurers on Change of Majority Shareholder Controller

Guidance Note for Licensed Insurers on Outsourcing

Guidance Note for Licensed Insurers on Unit Linked Pricing.

Guidance Note on Actuarial Valuations

Guidance Note on Insurance Fraud

Guidance Note on Internal Models

Guidance Note on Producer Owned (Re)Insurance Companies

Guidance Note on Supervisory Ladder of Intervention

The above guidance does not require any changes as a result of the New and Amended Laws

Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002

Code of Practice for Insurance Intermediary Applicants and Licensees Conducting Business from with the Bailiwick of Guernsey

The above code does not require any changes as a result of the New and Amended Laws

The Banking Supervision (Bailiwick of Guernsey) Law, 2020

Legal Risk Guidance Note for Banks

Outsourcing Risk Guidance Note for Banks

Pillar 2 Add-on Guidance

The above guidance does not require any changes as a result of the New and Amended Laws

 

Large Exposure Policy

Guidelines to Banks and their Auditors

Guidelines to Banks and their Auditors under s1(b)(ii) of the Banking Supervision (Accounts) Rules, 1994

The above guidance documents are covered by a separate consultation which closed on 11 May 2021 so will not be addressed in this paper.

 

Guidance on the Annual Compliance Form for Banks

This guidance document will be covered in a separate, forthcoming, consultation regarding re-issuing requirements for the annual review currently in the law as rules, so will not be addressed in this paper.

 

 

Background to the proposals

Current Codes and Guidance 

Appendix 1 sets out all Commission Codes and Guidance Documents that are currently in issue. 

Current Codes and Guidance Documents to be removed to clarify regulatory standards in force 

Some of the Codes and Guidance Documents, set out in Appendix 1, are obsolete and it is proposed that these will be withdrawn and placed into the ‘archived’ section of the Commission’s website. 

Part 2 of this consultation paper sets out a table of the Guidance Documents that the Commission intends to withdraw and archive.

Re-issued Codes and Guidance Documents

The Codes and Guidance, made under the previous laws, were drafted and amended over a number of decades to reflect the changing needs of the financial services industry.

The Codes and Guidance Documents are not changing substantially.  The substance and meaning of the Codes and Guidance Documents is intended to remain the same.  It has, however, provided an opportunity to update the language used, making it consistent with the New and Amended Laws and proposed Rules made thereunder, correct minor drafting errors and check that any internal and external references remain relevant when the New and Amended Laws and proposed Rules come into force.

The Codes and Guidance Documents included in this Consultation Paper have been reviewed and updated but they retain the meaning and purpose of the Documents that they replace.

 

 

Overall policy approach

The draft Codes and Guidance Documents do not set out to implement policy change but replicate the current Codes and Guidance Documents with the incorporation of new terminology and updated referencing.

Save for new terminology the proposed re-issued Codes and Guidance Documents will be familiar to licensees and should be consistent with their current practices. 

Part 3 sets out the draft Codes and Guidance Documents along with a more detailed explanation where any noteworthy amendments have had to be made, e.g. the replacement of out-dated references.

 

Next Steps

 

The closing date for the Consultation Paper is 26 July 2021. Responses to this Consultation Paper will be considered by the Commission with a view to issuing the Codes and Guidance Documents, in final form, during 2021.

What happens next

 

 


 

 

Audiences

  • Anyone from any background