Lending, Credit and Finance Rules and Guidance, 2023 (Consolidated Version)

Summary

This is the consolidated Lending, Credit and Finance Rules and Guidance, 2023, made by the Guernsey Financial Services Commission under the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022. It sets out binding rules (with accompanying non-binding guidance in shaded boxes) governing licensees carrying on lending, credit, finance and virtual asset service business in the Bailiwick, covering governance, conduct of business, prudential requirements, cooperation with the Commission, consumer protection, and licence-specific obligations for each licence category.

• Governance and effective management: Licensees must have at least two Bailiwick-resident directors, maintain effective policies and controls, keep a breaches register, manage conflicts of interest, prepare audited accounts, complete an annual review and annual return, file electronically, keep adequate records, control outsourcing, and screen/train employees to required qualifications.
• Conduct of business: Rules on customer relations, complaints handling, protection of customer money, APR and total charge for credit calculations for regulated credit agreements, business transfer notifications, and promotion/advertising standards.
• Prudential requirements: Licensees must hold adequate insurance and maintain minimum financial resources.
• Cooperation with the Commission: Licensees must notify the Commission of specified events and cooperate generally with supervisory requests.
• Consumer protection: Prohibitions on unfair agreement terms under Part 6 and Schedule 4.
• Licence-specific rules: Separate detailed requirements for Part II (consumer credit) licences including cooling-off periods, maximum cost of credit, early repayment and appointed retailers/motor traders; Part IIA equity release licences with customer age limits, excessive-charging controls, independent legal advice, and a cold-calling ban; Part III Financial Firm Business and VASP licences, including environmental declarations and safekeeping of customer virtual assets; and Part IV licences with customer limits and customer information duties.
• Ancillary services: Providers of advice, debt administration, and equity release key-facts illustrations/advised sales must meet dedicated conduct standards.

The Rules apply to all holders of licences issued under the 2022 Law unless the Commission grants a written exclusion or modification, and the Commission may also issue supplementary (non-binding) guidance. The document is a large, multi-part regulatory instrument; specific numeric deadlines are mostly recurring administrative periods (e.g. annual filings, accounting periods) rather than fixed calendar dates.

Key obligations

• Ensure at least two individuals with responsibility for directing the business are resident in the Bailiwick
• Maintain effective governance policies, procedures and controls and a breaches register logging non-compliance
• Establish, implement and maintain a written conflicts of interest policy and keep records of conflicts and how they are managed
• Prepare audited accounts (unless acting solely as an ancillary services provider under Part II) in accordance with UK, US or IFRS standards, accompanied by an auditor's report
• Set an accounting period not exceeding 12 months
• Complete an Annual Review and file an Annual Return with the Commission
• File returns/notifications electronically as required
• Maintain adequate accounting and other records
• Retain responsibility for, and oversee, any outsourced functions
• Screen and train employees appropriately and ensure supervised roles meet notification/vetting requirements under the Law
• Take responsibility for, and ensure compliance by, appointed retailers and appointed motor traders
• Handle customer complaints and safeguard customer money in accordance with the Rules
• Calculate APR and total charge for credit correctly for regulated credit agreements
• Notify the Commission before introducing a new product or materially varying an existing product, confirming whether it meets mandatory product standards
• Provide cooling-off periods, information to customers, and comply with maximum cost of credit and early repayment rules under Part II licences
• For equity release business: verify customer age, prevent excessive charging, ensure independent legal advice is obtained, and refrain from cold calling
• Maintain insurance cover and adequate financial resources
• Notify the Commission of specified events as required under Part 5
• Comply with unfair agreement terms restrictions under Part 6 and Schedule 4
• For VASP licensees: make required environmental declarations and safeguard customer virtual assets
• For Part IV licensees: observe customer limits and provide required customer information

Applies to

Part II licensees (consumer credit providers), Part IIA equity release licensees, Part III Financial Firm Business licensees, Part III VASP licensees, Part IV licensees, appointed retailers, appointed motor traders, ancillary service providers (advice and debt administration providers)

Deadlines

• annually: Licensees must complete an Annual Review and submit an Annual Return to the Commission
• not exceeding 12 months: A licensee's accounting period must be set and must not exceed 12 months
• prior to introduction: A licensee must give prior written notice to the Commission before introducing a new product or materially varying an existing product

Related documents

• This document is made under Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (Consolidated)