The Lending, Credit and Finance Law (Bailiwick of Guernsey) is coming into effect in July 2023. To help you make sense of this new Law, we recently sat down with Rachel Gardiner, Head of Prescribed Roles, and Alison Dodd, Business Development Director. Both Alison and Rachel work at Platinum Compliance (Guernsey), an Ocorian compliance consultancy subsidiary.
What does the impending Lending, Credit and Finance (Bailiwick of Guernsey) Law entail?
The purpose of the Law is to protect customers who make use of consumer credit and home finance. The Law replaces the existing registration regime for non-regulated financial services businesses and introduces regulation of virtual asset service providers, peer-to-peer and crowdfunding platforms.
When does the Law come into effect?
The Registration of Non-Regulated Financial Services Businesses “NRSFB Law” (Bailiwick of Guernsey) Law, 2008 and the NRFSB Amendment Ordinance 2008 will be repealed on 1st July 2023.
As such, on 1st July 2023 the above laws will be replaced by the Lending, Credit and Finance Law, 2022 (“LCF Law”) which will come into full effect.
What will the Law mean for businesses that require a licence?
Businesses firstly need to understand if these changes apply to them. If they do, applications for licences must be complete by 31 March 2023, any later and the licence may not be approved by the cut-off date of 1 July 2023.
How do I complete an application if the changes do apply to me?
In the first instance, take a look at the LCF Law framework, which is set out in three parts and identify if your business falls within Part II, III or IV.
- Part II – Consumer Credit and the provision of services ancillary to credit.
Part II is intended to offer protection to customers using consumer credit and home financing when buying goods and services, seeking to prevent “unfair terms and agreements” being applied. Some examples of the changes include the introduction of an ‘Approved Motor Trader’ arrangement and limitations on consumer credit charges.
- Part III – Financial Firm Businesses (“FFB”) and Virtual Asset Service Providers (“VASP”).
Part III replaces the registration regime under the NRSFB Law for FFBs, as such, firms previously registered as NRFSBs will need to apply for a licence under the LCF unless they qualify for exemption. It also regulates VASPs providing certain virtual assets activities.
- Part IV – Financial Platforms and intermediation.
Part IV regulates peer to peer, crowdfunding platforms or alternative non-bank credit or finance intermediation (meaning intermediation or brokerage services) operating from the Bailiwick.
What should I do if I am still unsure if I need a licence?
Platinum Compliance (Guernsey) Limited are on hand to work through a GAP analysis and/or decision tree of your business under the new LCF law, following the rules and guidance provided by the GFSC. If your business requires a licence, we can assist with, or complete a new regulatory application on your behalf.
The LCF rules and guidance also provide a list of exemptions from licensing obligations following industry feedback to ensure that Guernsey’s competitive advantage isn’t eroded. Further information can be found on the GFSC website here.
What happens if I do not have a licence as of 1 July 2023?
By 1 July 2023, if you find yourself without a licence you may not operate or offer lending and financing services to your customers until the appropriate licence is in place.
What if I do not have the infrastructure or technical knowledge to review if my policies and procedures are compliant on a regular basis?
As well as guiding you through the application process of the LCF Law, Platinum can help manage your regulatory, compliance and legal obligations, providing you with certainty and peace of mind.
- Technical knowledge and compliance awareness
- Review and enhance current credit agreements to include new regulatory requirements
- Development of Compliance Monitoring Programmes (“CMP”) to monitor all regulatory obligations
- Implementation and ongoing review of policies and procedures
- Draft Money Laundering and Terrorist Financing business risk assessments
- Anti-Money Laundering and Countering Financial Crime training
- Money Laundering Reporting Officer provisions
Where can I find ongoing support?
If you require any further support or wish to discuss this new law in more detail, please contact us via [email protected] or +44 (0) 1481 725775.