Notice of Disapplication of Licensing Requirement (Exemptions) under section 40 of the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (2023-06-23)

Summary

This is a Notice issued by the Guernsey Financial Services Commission under section 40 of the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022. It sets out specific categories of activity and arrangement for which the Commission disapplies the requirement to hold a licence under Part II (credit business), Part III (financial firm business) or the VASP licensing regime of that Law. It does not itself impose new duties, but defines exemptions from licensing that regulated and unregulated persons may rely on if their circumstances fall within the listed categories.

Credit business licence exemptions

• Family and personal lending: Persons or wholly family owned entities extending credit to family members, directors, partners, shareholders, beneficial owners or employees are exempt, subject to conditions.
• Trust related lending: Guernsey trustees and trust owned companies lending to named beneficiaries of the trust do not need a licence.
• Lombard lending: Lombard lending secured against marketable securities by persons already licensed under another regulatory law is exempt, but only where borrowers are High Net Worth Individuals as defined in the Commission's Lending, Credit and Finance Rules.
• Hire, lease and secured lending: Hiring or leasing arrangements that are not hire purchase agreements, and secured lending against real property outside the Bailiwick or against non residential Bailiwick property, are exempt.
• Insurance premium finance: Insurance intermediaries offering insurance payable in instalments directly with the insurance provider are exempt.
• Appointed retailers and motor traders: Retailers and motor traders providing credit through a single credit provider under written agreement are exempt; motor traders are capped at £250,000 of qualifying credit sales per annum.

Financial firm business licence exemptions

• Related party and internal lending: Lending to family members, directors, partners, shareholders, beneficial owners, employees or within a group structure with an established Bailiwick place of business is exempt, subject to defined conditions.
• Administered entities and ancillary lending: Persons administered by a licensee under the fiduciaries, protection of investors, or insurance intermediaries laws, and investors lending to administered entities, are exempt where the lending is ancillary to the main activity or part of an investment or group holding structure, not lending to unconnected third parties.
• Bailiwick to Bailiwick lending: Lending between entities both established in the Bailiwick is exempt where the credit extension is ancillary to the lender's main activity.
• VASP licensees: Entities already holding a Part III VASP licence under the Law are exempt from also needing a financial firm business licence.

VASP licence exemptions

• Own account virtual asset activity: Persons investing in, holding or trading virtual assets purely for their own benefit are exempt, but this does not cover persons or groups offering virtual asset products or services to others.
• Administration and management services to VASPs: Licensees under the fiduciaries, protection of investors, or insurance intermediaries laws providing administration or management services to VASPs that hold a Part III VASP licence or are exempt under category I are themselves exempt from needing a VASP licence.
• Collective investment schemes: Authorised or registered collective investment schemes investing, holding or trading in virtual assets are exempt from the VASP licensing requirement.

The Notice was originally issued on 1 February 2023 and revised on 23 June 2023. Persons relying on an exemption should check carefully whether their specific circumstances meet all stated conditions, as several exemptions are conditional on matters such as ancillary purpose, ownership structure, or monetary thresholds.

Applies to

credit business licensees, financial firm business licensees, VASP licensees, Guernsey trustees, insurance intermediaries, appointed retailers, appointed motor traders, fiduciary and administration business licensees, Protection of Investors Law licensees, collective investment schemes