The Fiduciary Rules and Guidance, 2021 (Consolidated Version, September 2022)

Summary

This is the consolidated 2021 Fiduciary Rules and Guidance issued by the Guernsey Financial Services Commission (GFSC), which replace the 2020 Fiduciary Rules and the 2017 Annual Return Regulations. They set the ongoing regulatory standards for licensed fiduciaries (trust, corporate, pension and foundation service providers) under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2020, covering governance, competence, conflicts of interest, accounting and client money, record keeping, outsourcing, conduct of business, prudential requirements and cooperation with the Commission.

• Licence structure: Introduces primary and secondary fiduciary licences, with rules on conversion between the two and a prohibition on secondary licensees actively trading independently of their primary licensee.
• Governance and competence: Boards and senior management must maintain effective policies, controls, recruitment and training, evaluate compliance with the Code of Corporate Governance, and satisfy the 4-eyes criterion and minimum licensing criteria.
• Conflicts of interest and client money: Licensees must maintain a written conflicts of interest policy, keep records of conflicts, and must not profit from holding Fiduciary Client Money.
• Accounting and reporting: Accounting periods must not exceed 12 months and cannot be changed without Commission approval; primary and secondary licensees must appoint an auditor and submit audited financial statements; personal fiduciary licensees must report financial particulars via the Annual Return.
• Record keeping, outsourcing, screening: Requirements cover retention of business records, control over outsourced functions, and employee screening and training.
• Conduct of business and prudential rules: Sets standards for integrity, acting in clients' best interests, advertisements, terms of business, complaints handling, insurance arrangements and minimum financial resources.
• Cooperation with the Commission: Establishes notification obligations for licensed fiduciaries and a general duty of cooperation with the GFSC.

The Rules revoke the 2020 Fiduciary Rules, the 2017 Annual Return Regulations and the 2012 Advertisements and Annual Returns Regulations, and came into force on 1 November 2021. This consolidated September 2022 version incorporates two 2022 amending instruments, including a transitional provision on insurance arrangements.

Key obligations

• Boards must ensure effective policies, procedures and controls to comply with the Rules and relevant legislation, and retain responsibility for outsourced functions
• Licensees must evaluate compliance with the Code of Corporate Governance and appoint Bailiwick-based senior executives commensurate with the nature, size and complexity of their business
• Licensees must keep a breaches register logging all instances of non-compliance with the Rules
• Accounting periods must not exceed 12 months and must not be altered without prior written permission from the Commission
• Personal fiduciary licensees must provide the Commission annually, as part of the Annual Return, with particulars of their financial position regarding regulated activities
• Primary and secondary fiduciary licensees must appoint and maintain an auditor at all times
• Primary and secondary fiduciary licensees must provide the Commission with financial statements within four months of the end of each accounting period, unless another Regulatory Law's reporting requirements are agreed to take precedence
• Licensees must establish, implement and maintain an effective written conflicts of interest policy and keep records of conflicts and how they are managed
• Licensees must not profit from holding Fiduciary Client Money
• Secondary fiduciary licensees must notify the Commission of their designation to a single primary fiduciary licensee on application, on conversion, and immediately if the designated primary licensee changes
• Secondary fiduciary licensees must not actively trade
• Licensees must comply with the amended insurance requirements in rule 4.1 at their next insurance renewal following the Fiduciary (Amendment)(No.2) Rules, 2022 coming into force

Applies to

licensed fiduciaries, primary fiduciary licensees, secondary fiduciary licensees, personal fiduciary licensees, Trust Service Providers (TSP), Corporate Service Providers (CSP), Pension Service Providers (PSP), Foundation Service Providers (FSP)

Deadlines

• within four months of the end of the accounting period: Primary and secondary fiduciary licensees must provide the Commission with financial statements for that accounting period
• 1st November 2021: Commencement date of The Fiduciary Rules 2021
• at the next insurance renewal following the date the Fiduciary (Amendment)(No.2) Rules, 2022 come into force: Licensees must comply with the amended insurance arrangements requirements in rule 4.1