Lending, Credit & Finance Consultation Paper

Closed 15 Sep 2017

Opened 18 Jul 2017

Feedback Updated 12 Feb 2018

We Asked

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. 

You Said

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. 

We Did

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. 

Overview

Bailiwick residents are not immune from an over reliance on credit following the prolonged low interest rate environment or unaffected by unscrupulous lending.  The Bailiwick shares potential lending hot spots, which have been publicised in the UK; for example a lack of understanding of the terms of a Personal Contract Plan (“PCP”) for a new car, or unaffordable loans.  The Commission in conjunction with the States of Guernsey wants to ensure that for the first time Bailiwick residents are awarded regulatory consumer protection.

Financial services businesses in the Bailiwick have an opportunity to innovate, evolve and grow through the regulatory framework proposed in this paper.  We have included some enterprising innovative alternative finance opportunities, such as the regulation of Customer Due Diligence (“CDD”) Platforms, which merit consideration.  The Commission has sought to create a principles based regulatory environment which could act as a stimulus for both the innovative business of today and potential finance business of the future; ultimately we want to see good finance business flourish.

I hope that whatever your background (and we are all ultimately consumers), you will consider feeding into this consultation process.  All comments, in writing, via Citizen Space, or even simply over a coffee with us, will be valued.

Gillian Browning

Director, Fiduciary Supervision Policy & Innovations Division

Guernsey Financial Services Commission

 

The proposals for the Lending, Credit & Finance project have been developed with assistance from focus groups that included representatives from industry, associations, consumer bodies and the States of Guernsey.  We are grateful for all the contributions, support and input provided.

 

 

What Happens Next

Thank you for completing the Consultation Paper's questions.

Your views and comments are important and will contribute to the development of the Lending, Credit and Finance Law.

 

Audiences

  • Consumer
  • Financial Advisor
  • Financial Services Business
  • FinTech
  • Lending, Credit & Finance Business
  • NRFSB
  • Prescribed Business
  • Lenders