Discussion Paper on Proposals to Create a Single Fiduciary Handbook and Revise Pension Rules

Overview

Introduction

Purpose of the Discussion Paper

The Commission seeks to regulate and supervise financial services in the Bailiwick of Guernsey, with integrity, proportionality and professional excellence, and in so doing help to uphold the international reputation of the Bailiwick of Guernsey as a finance centre.

Consistent with the Commission’s objectives, the proposals in this Discussion Paper are designed to enhance the levels of confidence and security in the Bailiwick’s regulatory and supervisory framework for fiduciary services and private pension provision thereby further augmenting its development as a financial centre.

The purpose of this Discussion Paper is to seek feedback from all interested parties on potential enhancements to the regulatory framework under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000 (the “Fiduciaries Law”) with the objective of ensuring that the regime continues to be both compliant with international standards and appropriate for the Guernsey market.

Responses to this Discussion Paper will be considered by the Commission with a view to making more detailed policy proposals in the form of a Consultation Paper to be issued later in the year.

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

Why your views matter

Background to the proposals

Fiduciaries

The Commission proposes a refresh of the policy framework underlying the Fiduciaries Law, primarily in the area of business conduct. This proposed change will ensure compliance with international standards while building on ongoing policy initiatives. This change will also introduce simplification and consolidation with the creation of a single Fiduciary Handbook (the “Fiduciary Handbook”).

The Group of International Finance Centre Supervisors (“GIFCS”), of which the Commission is a member, issued the Standard on the Regulation of Trust and Corporate Service Providers[1] (“the GIFCS Standard” or “the Standard”) in 2014. The Standard sets a minimum benchmark for the supervision of businesses administering international trusts and companies. All GIFCS members have committed to be ‘largely compliant’ with the Standard by 2019. Whilst a number of necessary related changes to the Fiduciaries Law, including the introduction of the concept of secondary licensees, are due to be addressed under the Revision of Laws Project (“RoL”), further enhancements to the underlying policy framework are also proposed. Such changes will include new provisions concerning client money, outsourcing, communication to clients (including advertisement) and terms of business.

At present firms licensed under the Fiduciaries Law are subject to relevant Codes of Practice (Codes of Practice for Corporate Service Providers (CSP), Trust Service Providers (TSP) and Foundation Service Providers (FSP), together, “the Codes”). It is proposed that these Codes will be repealed and the current provisions reframed and strengthened under a single Fiduciary Handbook. New provisions relating to the GIFCS Standard will also form part of this new Handbook.

It should be noted that in the event that a Fiduciary Handbook is introduced it will not remove the requirement for licensees to comply with the Handbook on Countering Financial Crime and Terrorist Financing.

Following the introduction of the Pension Rules in July 2017, the Commission invited comment from industry taking the opportunity to review the drafting in light of experience and observations post-implementation. A number of suggestions for amendments were received and Part 2 of this Discussion Paper summarises these responses and provides the Commission’s feedback.

Additionally, this Discussion Paper makes a significant proposal in respect of the structure of the regulatory framework for pension licensees. As licensed fiduciaries, firms subject to the Pension Rules are also subject to the Codes. Consequently such firms must comply with two sets of requirements which may overlap or lack consistency, increasing regulatory burden. The Commission proposes alleviating this burden and clarifying requirements through the consolidation of the conduct of business-related elements of the Pension Rules into the new single Fiduciary Handbook.

It should be noted that it is not proposed to repeal the Code of Practice - Company Directors.

Next Steps

The closing date for the Discussion Paper is 30 April 2019. The Commission will then consider all the comments received and engage with relevant industry representative bodies with the view to consulting on detailed proposals in due course.

[1] http://gifcs.org/images/GIFCSStandardonTCSPs.pdf

What happens next

The closing date for the Discussion Paper is 30 April 2019. The Commission will then consider all the comments received and engage with relevant industry representative bodies with the view to consulting on detailed proposals in due course.