What is the Revision of Laws project?
Today the Commission released final versions of its amended rules, codes and guidance resulting from the conclusion of a lengthy project to update the regulatory laws. The Revision of Laws project was originally kicked off when the GFSC published a Discussion Paper back in November 2014. The aim of the project was to introduce standardisation within the various laws and bring them in line with international standards. There have been numerous iterations, discussions and consultations on the subject since and on Friday 10 September 2021, some seven years later, the States of Deliberation approved the necessary Ordinances to bring into effect the revisions to the regulatory Laws. There are four new Laws which are as follows:
The Protection of Investors (Bailiwick of Guernsey) Law, 2020
The Banking Supervision (Bailiwick of Guernsey) Law, 2020
The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020
The Financial Services Commission (Enforcement Powers)(Bailiwick of Guernsey) Law, 2020
Amendments to the Insurance Business (Bailiwick of Guernsey) Law, 2002, and the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 will come into effect on the same date.
As a result of the changes to the Laws, the underlying rules, regulations, codes and guidance have all required amendment. Certain new requirements have also been written into new rules and some old codes and guidance notes are being discontinued. No significant policy changes have been made to the existing rules but each set has been standardised to make them easier to use and more comparable.
What are the relevant dates?
The passing of the commencement ordinances means that the Laws will come into effect on 1 November 2021.
The GFSC has published the revised rules today, 6 October, with an effective implementation date of 1 November 2021.
New application forms and online portal forms reflecting the changes will be available for licensees to use by the end of October.
What has changed?
There are two types of changes that firms will need to consider: regulatory changes and administrative changes.
The new laws introduce new categories of supervised roles – the vetted supervised role and the notified supervised role. After 1 November 2021:
anyone wishing to take up the role of director, controller, partner, MLRO, MLCO or compliance officer (a vetted supervised role) for a licensed investment or fiduciary firm will need to seek a no objection to that appointment before acting;
anyone who has become a significant shareholder, other supervised manager or a company secretary (a notified supervised role) must notify the Commission of such appointment within 14 days of appointment and when they cease to act;
The Laws also introduce the concept of an approved supervised role but no regulations have yet been implemented setting out the types of role that would fall into such category.
New rules and guidance have been released under the POI Law for the notification to the GFSC of certain activity which is ancillary to controlled investment business. At present such activity requires the granting of a discretionary exemption under the Fiduciary regime. The 2020 Fiduciaries Law introduces a new statutory exemption from licensing for such activity where this has been notified to the Commission under the POI regime.
New provisions have been made, as required under the new Fiduciaries Law, for the re-categorisation of full and joint fiduciary licensees as primary or secondary licensees respectively which will take effect on 1 November 2021, unless the licensee has advised the Commission otherwise, as per the Notice to all Fiduciary Licensees of 15 September 2021.
Advertising restrictions applied to Personal Fiduciary Licensees have been repealed and such activity brought under the applicable provisions of the Fiduciary Rules.
Whilst the new rules will not bring in any policy changes, other than those highlighted above, the standardisation of each set of rules will mean that a large number of existing rule numbers, titles and references will change.
What do licenced Investment & Fiduciary firms need to do?
Firms will need to assess how the amendments will impact their business and make changes accordingly. In particular, all firms will need to ensure they have appropriate controls in place to ensure all staff taking up supervised roles are appropriately notified to the GFSC. All relevant staff will need to be made aware of the changes. BDO’s Advisory team are well placed to assist firms with this transition should you require any assistance implementing these changes.
All policies, procedures and controls including the firm’s compliance monitoring programme should be checked and references to old laws, rules, codes and guidance amended.
For those BDO clients utilising Hyperion to conduct their compliance monitoring, the revisions to the Laws and rules will automatically be carried over to the system, and we’ll be in touch to flag those key changes requiring your attention.
Should you wish to find out more about Hyperion, further information and contact details to arrange a demo can be found here: https://www.bdo.gg/en-gb/microsites/hyperion/home
For further details on the changes to the Ancillary Vehicles regime please see BDO’s previous article - BDO Limited: Guernsey audit, assurance, advisory and tax services - BDO