The Guernsey Financial Services Commission has launched a consultation on a package of new regulations it says are aimed at developing and maintaining a consumer credit industry within the Bailiwick.
It says the need for such new regulations was cited by PwC last year, when it published a report containing recommendations for the development of a fintech industry in the States of Guernsey.
The PwC report, The States of Guernsey’s Strategic Vision for FinTech, “included a recommendation to support the Commission in revising the Non-Regulated Financial Services Business (Bailiwick of Guernsey) Law and introducing regulation for commercial lending,” the GFSC says, in a statement on its website announcing the consultation.
According to banking industry sources, the Non-Regulated Financial Services Business (NRFSB) regulations currently enable non-bank financial services businesses to carry out bank-like operations with GFSC oversight but not, officially, as GFSC-regulated entities, and have the virtue of being flexible and enabling businesses to set up relatively easily.
The consultation, therefore, is seen as an effort to determine whether there is an appetite to tighten up the rules under which such non-traditional bank-type entities exist.
The GFSC said it is seeking feedback from firms currently involved in lending, credit and finance operations by 24 October.
Concerns over risk to consumers
Explaining its reasoning behind the new regulations, the GFSC said it was concerned that the Bailiwick of Guernsey’s current lack of consumer lending and credit regulation could “lead to consumers being at risk of not being treated appropriately”, and possibly lacking “certainty” with regard to the regulatory environment for innovative lending firms.
“The proposals contained within the discussion paper seek to promote growth and expansion of the Bailiwick economy whilst protecting the interests of the consumer,” the GFSC said.
As noted here on Friday, the number of officially regulated banks active on Guernsey and the other islands within the Bailiwick has fallen considerably over the past two decades, even as the population has grown, and its financial services industry has flourished.