The Guernsey Financial Services Commission (GFSC) is proposing that Guernsey should not immediately follow the UK by introducing the proposals of the UK Financial Services Authority’s (FSA) Retail Distribution Review (RDR), but instead wait and see what happens in the UK and elsewhere.
The RDR examined long-standing problems in the UK retail investment sector, particularly around professional practices and qualifications, mis-selling, and selling on commission.
The FSA proposes to replace commissions with fees, increase educational standards, and improve the clarity and accuracy with which firms describe their services to retail consumers. It is expected that RDR will be implemented in the UK from 1 January 2013.
The Commission in Guernsey has been actively monitoring policy developments, both in the UK and the other Crown Dependencies, and liaising with relevant intermediaries in Guernsey. The Commission has also carried out an extensive internal policy discussions.
A spokesman for the Commission, said: “Following an extensive investigation, we have concluded that there is no immediate need for Guernsey to reproduce the FSA’s proposals. Instead we are recommending that a cautious approach be adopted to see how the RDR develops in the UK, and how other jurisdictions approach these issues. These will be used in a further reassessment by the Commission in due course, but not too long delayed.
“The Commission will continue to consider any evidence of abusive or harmful sales practices, and whether as a result of RDR any regulatory arbitrage occurs between Guernsey and the UK, which would be undesirable. In addition, the Commission recommends that further consideration be given to creating a regime in Guernsey that is much more transparent with regards to commissions for insurance investment products than at present.”
The Position Paper can be viewed here.