Consultation Paper on Unclaimed Money under the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (March 2024)

Summary

This is a consultation paper issued by the Guernsey Financial Services Commission on 28 March 2024, seeking industry feedback on a proposed new policy framework for how authorised and registered collective investment schemes handle Unclaimed Investor Money. It follows a 2022 to 2023 thematic review which found inconsistent industry practice and no dedicated rules on the topic outside the Class B Rules.

• Definition: Proposes a refined definition of Unclaimed Money as sums where the rightful owner is known but contact has been lost, or money that cannot be paid out due to inadequate CDD (Blocked Investor Money).
• Documented policy: Scheme Boards would be expected to adopt a documented Unclaimed Money policy covering identification of a responsible entity, contact timeframes, board reporting, de minimis amounts and cost allocation.
• Responsible entity: Each scheme's policy should designate a responsible entity, typically the Designated Administrator, to implement the policy and make reasonable, at least annual, contact efforts for a minimum of six years.
• Disclosure: Schemes would be expected to disclose their Unclaimed Money policy within their Scheme Particulars.
• Class B Rules amendment: Proposes deleting Rule 5.2(2) and Rule 8.3(3) of the Class B Rules, which currently transfer unclaimed distributions to scheme property after six years, in favour of the broader proposed policy.
• Wind down and liquidation: Liquidators would be expected to remain responsible for and control Unclaimed Money at end of scheme life, following the policy, with options such as court-approved payment to charity or bona vacantia after reasonable efforts.
• Scope: Proposed to apply to all authorised and registered collective investment schemes, including suspended schemes, but excluding Private Investment Funds.

The document text also includes the materials that resulted from this consultation: a Guidance Note on Unclaimed Investor Money (issue date 17 December 2024) reflecting the proposed policy, and the Authorised Collective Investment Schemes (Class B) (Amendment) Rules, 2024, made 13 December 2024 and in force from 20 December 2024, which formally delete Rule 5.2(2) and Rule 8.3(3) of the Class B Rules and do not apply retroactively to Class B schemes already authorised before that date.

Key obligations

• Respondents wishing to comment must submit feedback on the consultation questions by 20 June 2024 via the GFSC Consultation Hub
• Under the resulting Guidance Note, Scheme Boards should approve a documented Unclaimed Investor Money policy identifying a Responsible Entity before scheme launch
• The policy should provide for reasonable contact efforts with lost investors at least once a year, continuing for at least six years after the first attempt, before efforts may cease
• Schemes should disclose their Unclaimed Investor Money policy within their Scheme Particulars
• Liquidators become responsible for Unclaimed Investor Money from the date of appointment and must administer it in line with the scheme's policy
• The Class B Rules are amended to delete Rule 5.2(2) and Rule 8.3(3), removing the prior six year automatic transfer of unclaimed distributions to scheme property for schemes authorised on or after 20 December 2024

Applies to

collective investment schemes (authorised and registered under the POI Law, excluding Private Investment Funds), Designated Administrators, licensees under the Protection of Investors Law, Scheme Boards, liquidators, Class B authorised collective investment schemes

Deadlines

• 20 June 2024: Deadline for industry responses to the consultation paper on Unclaimed Money
• 20 December 2024: Coming into operation of the Authorised Collective Investment Schemes (Class B) (Amendment) Rules, 2024, which delete Rule 5.2(2) and Rule 8.3(3) of the Class B Rules; these amended Rules do not apply to Class B schemes authorised before this date
• once per year, for at least six years after first contact attempt: Commission's expectation for minimum frequency and duration of reasonable efforts to contact investors of Unclaimed Investor Money under the resulting Guidance Note