The Guernsey Financial Services Commission has published a consultation paper setting out the Commission’s rules and approach for regulating the sectors covered by the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022, and is seeking feedback on its proposed rules and approach.
The purpose of the law, which was passed by the States of Guernsey on 14 July, is to protect customers in the bailiwick who make use of consumer credit in all its forms, including individual loans, home finance and credit for the purchase of goods and services.
Firms offering or intermediating such services in or from within the bailiwick will need to be licensed and will be regulated accordingly.
The consultation sets out the scope of the licensing regime and how different sectors will be treated once the regime comes into effect.
For example, in most cases, motor traders facilitating finance arrangements will be required to have a licence.
Retailers offering credit in their own right will require a licence, but in most circumstances high-street retailers offering credit from a third-party lender will not be required to have a licence.
Fintech issues
In addition, the law and accompanying rules cover fintech platforms operating crowdfunding and peer-to-peer platforms, as well as virtual asset service providers.
It introduces licensing for a wide range of activities related to crypto. Individuals holding virtual things like crypto instruments solely for investment purposes will not need to be licensed.
Guernsey is introducing these rules in part to ensure it remains compliant with the published expectations of the Financial Action Task Force, which has set out guidance on how countries must act to stop crypto being used for criminal purposes.
The law will also replace the existing Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008, and introduce instead the licensing and regulation of 'financial firm businesses'.
• A copy of the consultation paper can be found here. Responses are sought by 15 September.