The Commission is working with the Isle of Man Financial Services Authority and the Jersey Financial Services Commission to encourage banks to adopt a consistent approach to dealing with “authorised push payment” (“APP”) fraud across the Crown Dependencies.

The framework proposed reflects high level principles and areas of common direction between the Crown Dependency financial services regulators.

Read the new framework here

The Commission has today issued a banking licence to Aston (Guernsey) Limited (“Aston”). Whilst Aston is in its current start-up phase, and until it has satisfied a number of prerequisites outlined by the Commission, it will not be able to accept deposits.

Aston (Guernsey) Limited will be known as Bank Aston.

The Commission is raising awareness of the use of non-bank payment service providers, such as electronic money institutions or EMIs, to ensure consumers know how to check adequate consumer protection is available.  

While online payments are generally made through bank accounts, the use of electronic money (e-money) stored in an online account, wallet, or pre-paid account, which may then be used for payments, is becoming increasingly popular.  

Only those payment service providers based within the Bailiwick, or specifically targeting Bailiwick residents, are required to be licensed by the Commission.  Individuals and businesses within the Bailiwick are able to use payment service providers based elsewhere, however the Commission does not have regulatory remit over those providers based outside the Bailiwick.

Individuals and businesses are encouraged to check whether the payment service provider is appropriately licensed in its home state and that adequate consumer protection is available. There is a risk that the provider, if not regulated by an equivalent body to the Commission, may not be acting in your best interests, and you may be left with limited options to take action against them.  In addition, should the provider go out of business, your money may be at risk. 

A list of all financial services businesses licensed and regulated by the Commission can be found on its website.  An up-to-date list of the Commission’s warnings can also be found on its website.

Further to the announcement in our 2021 Annual Report advising of our intention to implement mandatory two-factor authentication (‘2FA’) on our Online Portals for all our regulated entities, we have been working on our background systems. On this basis by 31 May 2023, the Commission intends to switch 2FA on for all Portal Users who have not yet enabled this functionality.

2FA is an additional layer of security recommended by the National Cyber Security Centre to ensure only authenticated users gain access to an online account and is an effective way to protect against many security threats that target user passwords and accounts.

The Commission has published updates on the Online Portals with further information and requested that users set up 2FA on their accounts as soon as possible. Any user who has not amended their account security will have email 2FA enabled automatically by 31 May 2023. Please note that for 2FA to work successfully it is important that the email address attached to a User Profile is correct or the user will be blocked out of their account.

A dedicated Support Inbox has been set up for any queries : 2FASupport@gfsc.gg and the Commission has created a 2FA User Guide.

The Policy & Resources Committee has today published a Consultation Paper seeking views on a proposed change to the requirements which affect some individuals acting as company directors, by way of business, in or from within the Bailiwick. The Commission encourages industry and stakeholders to contribute their feedback.

Acting as a director for any company in the Bailiwick, by way of business, requires directors to hold a personal fiduciary licence granted by the Commission under the Fiduciaries Law[1]. There are a number of exemptions to this requirement. By way of example, some of these include when a director is the director of a local trading company based in Guernsey, when the person is a director of a company quoted on a recognised stock exchange; or when the company is supervised by the Commission; or when an individual holds directorships in the course of their duties as an employee of a licensed trust and corporate services provider.

One exemption under the Fiduciaries Law is the ‘six directorship’ exemption, which means individuals who hold directorships of six or fewer companies being directorships which are not subject to another exemption under the Fiduciaries Law, are not required to hold a personal fiduciary licence. They are however still subject to anti-money laundering and counter-terrorism financing obligations. In 2015, a MONEYVAL[2] report recommended measures should be introduced to ensure effective compliance with these obligations.

The Policy & Resources Committee, following discussions with the Commission, is proposing changes which would see a registration framework extended to directors who come under the ‘six directorship’ exemption. This is proposed as a practical and proportionate solution to deliver on the recommendation. 

It is envisaged that certain directors will be exempt from the registration requirements. In addition, the proposals will not directly impact individuals who rely on other exemptions under the Fiduciaries Law (including those cited above i.e. charitable directorships, directors of companies based in Guernsey which are trading locally (such as local florists, grocers, restaurants), or employees of licensed fiduciaries acting as a director by virtue of their employment).

Further information, including details of proposed registration requirements and exemptions are included in the consultation document which can be found here.

The Commission will be holding drop-in sessions during the consultation period at which interested parties can learn more about the proposals, details of which will follow in due course.

 Comments can be sent in by emailing a response to policyandresources@gov.gg and AMLCFT@gfsc.gg by 16 January 2023.

The Commission has today 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 new Law, which was passed by the States of Guernsey on 14 July 2022, 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. 

In addition, the Law and accompanying Rules covers Fintech platforms operating crowdfunding and peer to peer platforms as well as virtual asset service providers (“VASPs”).  It introduces licensing for a wide range of activities related to crypto.  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 detailed 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”.

The Consultation Paper sets out, using worked examples, the scope of the licensing regime and how different sectors will be treated once the regime comes into effect. 

In issuing this consultation, the Commission continues to seek feedback from a wide range of stakeholders, including consumers and potential licensees. This will assist the Commission in developing its supervisory approach. 

Respondents are encouraged to submit their comments online using the Commission’s Citizen Space Consultation Hub at the following link, where copies of the Consultation Paper and draft Rules and Guidance can also be found: http://consultationhub.gfsc.gg/

Responses to the Consultation Paper are sought by 15 September 2022. 

The Commission today launches a consultation paper on proposals for increasing the licence fees paid by firms. The consultation period will close on Wednesday 14 September.  The consultation paper is available on the Commission’s Consultation Hub.

The Commission is consulting on an overall increase in fees of 9%. Other specific proposals to change fees are outlined in the consultation paper and include application and annual fees in respect of firms to be licensed under the Lending, Credit and Finance legislative framework.

In prior years, the Commission has sought to contain its fee increases and over the last eight years fee increases have averaged 2.25%. This has been despite evolving and increasing regulatory standards that led to many of our peer regulatory bodies levying significantly higher fee increases. We need to continue to retain and recruit staff in a competitive financial services sector considering market growth and demand for staff. We are also continuing to improve our internal systems to ensure we have the infrastructure necessary so that the Commission can continue to meet its international regulatory obligations and prepare appropriately for anticipated inspections of the Bailiwick by international standards organisations.

Speaking about the proposals, the Commission’s Chairman, Julian Winser, said: “We are reluctant to ask for this increase at a time when we are fully aware that industry too is susceptible to inflation. However, the Commission is playing catch-up particularly in respect of finance industry salaries combined with a shortage of suitable candidates to fill our significant number of vacancies. Our focus continues to be on enabling the best possible outcome for the Moneyval inspection in early 2024. I do ask industry to bear in mind our costs, and therefore demands on industry fees, remain both below inflation and lower than other comparable financial services regulators.”

The Commission has today published a Consultation Paper proposing the introduction of a Natural Capital Fund regime.  It is also, through a separate Consultation Paper, bringing forward proposals to counter the risk of greenwashing. Both Consultation Papers can be found here. 

Creating an Ecosystem for Natural Capital Investment

The first Consultation Paper proposes the creation of a Natural Capital Fund designation to complement the Bailiwick’s existing, climate change focused Guernsey Green Fund regime¹. The proposed rules would create a new designation for funds that are committed to making nature positive investments².  Together the Guernsey Green Fund and Natural Capital Fund are designed to provide Guernsey funds with a choice of complementary sustainability designations based on international standards.

To be eligible for the Natural Capital Fund designation, funds will be required to set and monitor appropriate targets aligned with the Convention on Biological Diversity’s Post-2020 Global Biodiversity Framework’s 2030 Action Targets and relevant United Nations’ Sustainable Development Goals. The required measurements relating to these targets and the controls around those measurements should give investors’ confidence that Natural Capital Funds’ sustainable investment objectives align with investor expectations¹.

No Greenwashing

In its second Consultation Paper, the Commission seeks to enhance levels of confidence in the Bailiwick’s sustainability framework by introducing measures that help mitigate the potential risk of greenwashing³. The proposed guidance reinforces the Commission’s expectations relating to disclosure requirements and applies where explicit sustainability claims are made in an offering or promotion.  The Commission is not aware of any greenwashing practices being undertaken by licensed Guernsey-based entities. That said it is important to guard against the risk of greenwashing and the Commission is consulting to keep the Bailiwick in step with other developed jurisdictions’ investor protection measures. This consultation paper also seeks views on future consideration of anti-greenwashing measures for other sectors beyond investment licensees and funds.

Speaking about the publication of these papers, the Director General William Mason, said, “In 2018, the Commission launched the Guernsey Green Fund creating what we believe was the world’s first regulated green investment fund. The Natural Capital Fund proposals and the accompanying measures to counter greenwashing are designed to allow the Bailiwick to continue to develop as a leading centre for sustainable finance.  We hope that Natural Capital Fund regime on which we are consulting may play a useful part in helping rebuild the planet’s stock of natural capital, enabling more businesses to work in harmony with nature.”