Consultation Paper on The Lending, Credit & Finance Rules, Guidance and Implementation (July 2022)

Summary

This is a Guernsey Financial Services Commission consultation paper seeking industry feedback on proposed Rules and Guidance to accompany the new Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022. The Law introduces licensing and regulation for consumer credit, home finance, financial firm businesses (FFBs), virtual asset service providers (VASPs), and crowdfunding/peer to peer intermediation, replacing the former Registration of Non-Regulated Financial Services Businesses regime. The paper explains scope, who needs a licence, minimum licensing criteria, exemptions, applicable Rules by licensee category, fees, and the application process, and invites comments before the Rules and Law are finalised.

• Scope: Covers consumer credit and home finance lending and broking, financial firm businesses, virtual asset service providers, and crowdfunding/peer to peer platforms operating in or from the Bailiwick of Guernsey.
• Licensing: Sets out who will need a licence, including newly regulated firms, firms previously registered under the NRFSB Law, and existing licensees, plus minimum capital and professional indemnity insurance criteria.
• Exemptions: Describes general exclusions and activities proposed to be exempted from licensing or partially exempted from the Rules, including certain peer to peer/crowdfunding activities.
• Consumer protection rules: Proposes rules on treating customers fairly, disclosure of interest rates and total cost of credit, advertising, cancellation/cooling off, early repayment, unfair contract terms, forbearance and default, and rules specific to payday/high interest loans and buy now pay later.
• Fees: Sets out proposed annual fees, application fees, and regulatory fees for the credit and finance sector.
• Application process: Explains who will need to apply for a licence, timeframes, and includes draft application forms and supplementary questions for prospective licensees.

The Law was approved by the States of Guernsey, Chief Pleas of Sark, and States of Alderney in July 2022 and was expected to come into force by the end of 2022, with the Rules to follow shortly afterwards. This document itself is a consultation draft; it does not yet impose binding obligations beyond invited responses, but signals the requirements firms will face once the Law and Rules take effect.

Key obligations

• Respondents wishing to comment on the proposed Rules and licensing approach must submit responses via the Commission's Consultation Hub before 15 September 2022.
• Once the Law and Rules take effect, firms carrying on consumer credit, home finance, financial firm business, virtual asset service provider, or crowdfunding/peer to peer activities in or from the Bailiwick will need to obtain a licence from the Commission unless an exemption or exclusion applies.
• Licensees will be required to treat customers fairly, provide clear disclosure of charges and interest rates, and comply with rules on advertising, cancellation, early repayment, unfair contract terms, and forbearance/default once the regime commences.

Applies to

consumer credit providers, home finance providers, financial firm businesses (FFBs), virtual asset service providers (VASPs), crowdfunding and peer to peer platforms, ancillary service providers, appointed retailers, motor traders, private lenders and Appointed Service Providers (ASPs), firms previously registered under the NRFSB Law

Deadlines

• before 15th September 2022: Deadline for responding to the Consultation Paper via the Commission's Consultation Hub.
• by the end of 2022: The new Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 is due to come into force.
• shortly after the Law comes into force: The Lending, Credit and Finance Rules and Guidance, 2022 are planned to take effect.
• as at 31 December 2022: Applicants must provide customer numbers, loan book values, income and complaints data as at/for the year ending 31 December 2022 in licence application supplementary questions.