Lending, Credit and Finance

The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022  

This is a new Law which comes into full effect on 1 July 2023.  From this date, persons carrying on the activities covered by the Law must hold an appropriate licence. 

The main purpose of the new Law is to protect customers who make use of consumer credit and home finance.  From 1 July 2023, persons offering or intermediating such services in or from within the Bailiwick must be licensed and regulated by the Commission, unless they meet the criteria for exemption.   

The Law replaces The Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008, with a licensing regime. It regulates and licenses Virtual Asset Service Providers (VASPs) – firms which carry out trading, custody and other activities in connection with crypto currency and virtual assets.   It also regulates Fintech platforms operating crowdfunding and peer to peer platforms from the Bailiwick.

The Bailiwick has introduced the Law and these Rules, in part, to ensure it remains compliant with international standards.  

What the Law will mean for consumers in the Bailiwick 

The Law introduces consumer protection measures for individuals who take out consumer credit or home finance, through what is termed a “regulated agreement”, from those licensed by the Commission.   

Consumers are entitled to, and lenders must provide, information in advance of entering into a regulated agreement, clear statements of monthly payments, the total cost of credit and interest rates.  This must be done in a way that allows customers to make meaningful comparisons between different types of credit, and also credit being offered by different lenders. 

Licensees must follow various rules, including to treat customers fairly, to take account of customer vulnerability, and where appropriate, carry out checks that customers can afford the credit arrangements they sign up to.  This is in addition to continuing to carry out customer due diligence in relation to the services they provide to their customers, as part of their regulatory requirements. 

Customers have the right to make early repayment of a credit agreement, which entitles them to repay in full, and terminate the agreement, without facing excessive charges.  Partial repayment of a credit agreement is at the lender’s discretion.  Customers must be treated fairly if they get into financial difficulty and have certain rights in respect of unfair contract terms.    

This does not prevent a Bailiwick consumer from approaching a firm based outside the Bailiwick, but if they do, they will not benefit from the protections in the Law and Rules.  They would have to rely on the protections in that firm’s jurisdiction, which may or may not protect a customer from the Bailiwick.   

Feedback, Final Rules and Exemptions 

Last year the Commission consulted on its approach to regulating these sectors, proposed exemptions and on draft Rules and Guidance.   

The Commission issued a feedback paper, together with the final Rules and Guidance and a written instrument for class exemptions, setting out the circumstances under which the requirement for a licence will not apply.  Although the consultation is closed, the Feedback Paper and Consultation Paper contain information that you may find useful.

These documents can be found on our Consultation Hub.

FAQs

To provide additional support and guidance for potential licensees and others affected by the Law, the Commission will from time to time publish answers to frequently asked questions on its website.   

Applications

The Commission has published information on the application process alongside the application forms.  The Commission intends to publish further supporting information, including application decision trees, by the end of January. 

Prospective licensees are invited to apply from 1 February 2023.

Fees, which comprise annual fees for licensees and application fees are set out in the Fees section of our website.

Early application is strongly encouraged.  There will be a 50% discount to the application fee for firms which submit high quality, complete application forms before 31 March 2023. 

The Commission will make reasonable efforts to process applications received by 31 March before 1 July 2023, but it cannot guarantee that applications after this date will be processed by 1 July 2023, when the Law comes into full effect.   

Queries  

This page will continue to be updated with relevant information as it becomes available.   

However, if in the meantime you have any queries, please contact the Lending, Credit and Finance team by email at [email protected].  

Date published:  19 January 2023