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Guernsey's new lending, credit and finance legislation from January 2023
New legislation has been approved in the Bailiwick (Guernsey, Alderney and Sark) to protect retail customers, as well as to introduce the regulation of other specified financial services businesses, service providers in relation to virtual assets and, crowdfunding/peer to peer intermediation services.
The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (the LCF Law) and the regulatory rules which underpin it are expected to come into force on 1 January 2023, with full implementation on 1 July 2023.
The primary purpose of the LCF Law is to regulate the credit and finance sector to protect consumers who make use of consumer credit, including individual loans, home finance and credit for the purchase of goods and services. Firms offering or intermediating such services in or from within the Bailiwick will need to be licensed to do so and regulated by the Guernsey Financial Services Commission (the Commission).
The LCF Law will also:
• replace and repeal the registration regime under the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 meaning that firms that are currently registered as a non-regulated financial services business will need to apply for a licence under the LCF Law. This will include lending other than where already caught by the consumer credit regime;
• introduce regulation for a wide range of activities related to crypto currencies and other virtual assets that have not previously been regulated in the Bailiwick, which is essential to meet international standards; and
• cover financial intermediation services which match investors to those seeking funding, ie peer to peer and crowdfunding services, which are not regulated in the Bailiwick in their own right. This is to ensure that customers based in and outside the Bailiwick can be confident that the platform operator is properly regulated and has sufficient knowledge and resources to effectively provide the service.
Latest updates from our legal teams
An introduction to the new lending, credit and finance law
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New legislation has been approved in Guernsey, Alderney and Sark (the Bailiwick) to protect customers in the Bailiwick who use consumer credit, as well as to introduce the regulation of other specified financial services businesses, service providers in relation to virtual assets and, crowdfunding/peer to peer intermediation services.
This Update gives an overview of the new legislation, namely the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 together with key dates.
Regulation of credit and consumer business in the Bailiwick
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The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 creates a new statutory framework for the protection of retail customers who make use of consumer credit and the provision of home finance.
In this Update, the second in the series, we consider Part II of the Law which regulates credit and consumer business.
Legislation to regulate unfair contract terms in the Bailiwick
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This Update provides a summary of new legislation which will regulate the use of unfair contract terms in the consumer credit and home finance space in Guernsey.
The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 creates a new statutory framework for the protection of retail customers who make use of consumer credit and the provision of home finance. In this Update, the third in the series, we consider the provisions relating to unfair contract terms.
Replacement of the non-regulated financial services businesses regime (NRFSB)
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The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (the LCF Law) will repeal and replace the existing registration regime under the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 meaning that firms that are currently registered as a non-regulated financial services business will need to apply for a licence under the LCF Law. This will include lending, other than where already caught by the new consumer credit regime.
Licensing under the new lending, credit and finance law
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The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 creates a new regulatory framework by requiring specified financial services businesses and service providers that offer or intermediate certain services in or from within the Bailiwick of Guernsey to be licensed to do so. In this Update, we consider the licensing regime, including the application process and the different categories of licence available under the new law.
Regulation of virtual asset service providers (VASPs)
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The Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 will regulate and license persons providing a range of services including those related to virtual assets and cryptocurrencies (known as Virtual Asset Service Providers or VASPs).
In this Update, we consider the impending regulation of VASPs.
The Commission's powers under the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022
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This Update provides a summary of the powers of the Guernsey Financial Services Commission (the Commission) under LCF, including:
• the sector-specific provisions relating to supervision, sanctions and offences
• criminal liability of directors, and
• appeals of decisions by the Commission.
Trustees and other fiduciaries – consideration of Guernsey's lending, credit and finance law
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The new legislation, which came fully into force on 1 July 2023, could have implications for trustees, fiduciaries and family offices, depending on the nature of the business activities.
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About Mourant
Mourant is a law firm-led, professional services business with over 60 years' experience in the financial services sector. We advise on the laws of the British Virgin Islands, the Cayman Islands, Guernsey, Jersey and Luxembourg and provide specialist entity management, governance, regulatory and consulting services.
