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The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000 (as amended) (the 2000 Fiduciary Law) will be repealed and replaced with the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 (the New Fiduciary Law) with effect from 1 November 2021.
Although the revision of laws project has taken time to complete and has resulted in a number of new laws, rules and guidance, the intention has not been to fundamentally alter the regulatory regime in Guernsey but rather to modernise, future proof and consolidate legislation resulting in a position which should minimise the administrative burden on licensees, avoid duplication of efforts or unhelpful inconsistency and continue to provide an efficient and well-regulated fiduciary regime.
This briefing summarises some of the key changes introduced by the New Fiduciary Law (although it is not designed to be a fully comprehensive summary of changes).
The New Fiduciary Law will be complemented by revised rules, codes and guidance coming into force on the same day, some of which we will refer to below briefly, although it should be noted that these most recent revisions do not introduce material policy changes and the changes they do introduce are relatively minor.
The New Fiduciary Law will also be complemented by the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 which will apply across all regulatory sectors and does away with any existing inconsistency in enforcement and related provisions between regulatory laws.
Following consultation with industry and reviews over the last seven years, the 2000 Fiduciary Law is being replaced by new updated legislation, together with complementary secondary and tertiary legislation (regulations, orders, rules and guidance), for the purposes of consistency with other regulatory laws as well as modernising and future-proofing legislation in line with international and EU standards with the maintenance of Guernsey's reputation as a well regulated and efficient financial centre in mind.
The New Fiduciary Law will continue to provide for the issuance of personal fiduciary licenses, however, two new categories of fiduciary licence will be introduced to replace the current licensing categories. Lead licensees will become "primary fiduciary licensees" whilst joint licensees will become "secondary fiduciary licensees".
This change will be automatic on 1 November 2021 for most licensees but if a joint licensee were to wish to become a primary fiduciary licensee, it would need to apply to the Guernsey Financial Services Commission (the Commission) with supporting evidence showing it has a business model and operations necessary to now justify a primary fiduciary licence.
Primary fiduciary licenses may only be granted to a Bailiwick body (being a Guernsey company or other legal person or unincorporated body, an Alderney company or unincorporated body or a Sark body) but may not be granted to a body with a corporate director or equivalent (for example, a corporate general partner of a limited partnership). Secondary fiduciary licences will only be granted to Bailiwick body which is a subsidiary of, or wholly beneficially owned by, a primary fiduciary licensee or its holding company. However, unlike primary fiduciary licenses, they may be granted to a body which has a corporate director (or equivalent).
Licensees should have by now received a notice from the Commission confirming the conversion of fiduciary licenses.
The definition of what constitutes a "regulated activity" will remain almost identical under the New Fiduciary Law with minor updates for the purposes of clarification (for example, offering the service to act as a member of a limited liability partnership is a regulated activity, as it would be for a director to provide directorship services).
However, one change in this area is the introduction of a new statutory exemption in relation to "ancillary vehicles", the definition of which is contained in section 20(3) of the Protection of Investors (Bailiwick of Guernsey) Law, 2020 (the New POI Law) which itself is subject to the publication of certain rules made pursuant to the New POI Law. It is not anticipated that these rules will be in force by 1 November 2021. When in force, the exemption will be subject to the prior notification of the Commission under rules made pursuant to the New POI Law. For further information on the New POI Law, read our article: The restated Protection of Investors (Bailiwick of Guernsey) Law.
Over the years, ancillary vehicles carrying out such activities have typically sought and obtained a discretionary exemption from the Commission under the 2000 Fiduciary Law, however, the New Fiduciary Law recognises that reliance on such regime may not be the most appropriate route and the introduction of a new statutory exemption for such activities will likely be welcomed by industry.
The New Fiduciary Law refers to new categories of key personnel of licensees that will hold "approved" or "notified" supervisory roles which are subject to notification to the Commission.
The categories of key personnel of licensees that will be "approved" supervisory roles cover (a) directors, (b) controllers, (c) partners of general partnerships, (d) general partners of limited partnerships, (e) members of limited liability partnerships, (f) MLROs, (g) MLCOs or (h) compliance officers.
The categories of key personnel whose appointment requires notification to the Commission as a "notified" supervisory role covers:
In line with changes to other regulatory laws, the New Fiduciary Law contains provisions regarding the submission by licensees of an annual return containing such information as may be prescribed by the Commission, including:
The New Fiduciary Law expands provisions regarding:
Various other changes have been made in the New Fiduciary Law, including changes to key definitions or new definitions and to provisions regarding:
Fiduciary licensees will be aware of the requirements set out in the Fiduciary Rules and Guidance, 2020 (the 2020 Rules) which have been in operation since 31 December 2020. This briefing does not propose to cover the provisions of the 2020 Rules in detail. However, by way of summary, it is noted that the 2020 Rules brought together the existing regulatory framework and replaced:
The 2020 Rules also brought in new or amended rules relating to banking, client money, outsourcing, record keeping and communications to clients, terms of business and complaints, employee screening and training. They also introduced additional rules applicable to fiduciaries acting as trustees, for corporate service providers and directors, and for foundation service providers.
Following consultation with industry earlier this year, the 2020 Rules will be replaced on 1 November 2021 with the Fiduciary Rules and Guidance, 2021 (the 2021 Rules) which contain certain amendments to reflect the provisions of the New Fiduciary Law. These include:
Other regulations and rules as well as codes and guidance relating to fiduciary regulation in Guernsey are also being amended in light of the revision of laws project and will come into force on 1 November 2021, but the changes are generally considered minor. In addition, some codes and guidance notes will no longer be used.
Please be aware that the above is a summary only of certain selected changes for information and does not constitute legal advice. The full scope of the changes made by the New Fiduciary Law and related secondary and tertiary legislation are not covered in this briefing.
Businesses will need to consider the impact of the changes on their business, including their internal policies and procedures.
If you wish to discuss how the changes to the fiduciary regime may impact your business, please do not hesitate to get in contact with your usual Ogier contact or a member of the team.
Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.
This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.
Regulatory information can be found under Legal Notice
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