Friday 15 January 2021
The Committee for Economic Development and the Policy & Resources Committee are proposing measures to improve consumer protection for customers of credit providers which are not banks.
The Committees have jointly submitted a policy letter, to the States Assembly, asking them to approve the new measures.
While non-bank credit providers are currently required to register with the Guernsey Financial Services Commission, this is primarily for the purpose of combatting financial terrorism and anti-money laundering. The legislation applicable to these businesses does not require adherence to a licensing process or make such businesses subject to supervision in respect of their lending activities. This limits consumer protection in relation to such businesses.
If the proposals are supported, benefits to customers would include among other things (i) new powers for the GFSC to review and challenge terms in contracts, or promotional material, which are potentially unfair and (ii) to stop the use of such terms or impose licence conditions or sanctions on such businesses, subject to a right of appeal.
The proposals will also look to extend consumer protection to certain areas of digital finance where the market has evolved in recent years giving rise to new business models which are involved in different forms of lending activities.
The Committees have consulted with industry groups and the Citizens Advice Bureau and believe that a requirement for these types of businesses, to be licensed by the GFSC, should be introduced, and also that any new rules for these businesses should be proportionate and should not restrict access to credit for customers.
Deputy Nick Moakes, the Committee forEconomic Development's lead for Financial Services said:
"We want to be sure that any regulations on local businesses are proportionate and don't restrict access to credit for customers, but we also want to make sure appropriate protection is in place to ensure customers are treated fairly. We've consulted with industry and trade associations and the Citizens Advice Bureau in order to strike the right balance."
