Guernsey: Out Of The Shadows

Last Updated: 11 February 2015
Article by Robin Fuller

Most Read Contributor in Guernsey, September 2018

Robin Fuller, chairman of the marketing committee of the Guernsey Investment Fund Association, looks at new opportunities for the Guernsey funds sector and highlights fintech as one likely to be significant.

Winston Churchill's quote of 'Never let a good crisis go to waste' has been very appropriate as we struggle to restore stability and prosperity to our banking and financial services industries.

Politicians and economists have bemoaned the lack of credit following the banking crisis, the impact this is having on households and industry, and how it is acting as a serious brake on economic activity. However, as the supply of bank credit ebbs, human ingenuity searches for alternatives and so we have seen the phenomenal growth in 'shadow banking'.

Shadow banking has emerged as a generic term for many quite different alternative forms of financing. The funds industry is increasingly serving as a direct conduit between institutions and investors holding cash, and property investors requiring development finance or the refinancing of existing loans. Commercial property loans, office developments and social housing development financing are just some of the opportunities being offered to investors.

Alongside property debt investment, Guernsey's funds industry has seen growth in various types of debt fund – bank loan book refinancing, factoring and trade financing to name but a few. Guernsey continues to be the domicile of choice outside of the UK for closed-ended London Stock Exchange-listed funds, and Guernsey's open-ended B scheme environment offers all the flexibility required for open-ended funds investing in debt.

Just as funds are an important part of the new loans landscape, helping to fill the gap left by the banks reducing their loan books, so crowdfunding and P2P lending are developing to meet the demand from households and businesses for loans, and also for equity investment into smaller companies and start-ups.

Crowdfunding has its origins in charitable giving and community funding and as such is unregulated. However as the funding model develops from one in which individuals make charitable donations or sponsor someone or an organisation for either no return or in return for a service, to one in which investors make equity investment into start-up and smaller companies so the business model migrates from the unregulated to the regulated financial services industry.

The crowdfunding model encompasses three quite distinct activities – origination, the sourcing of debt from borrowers, platform, the web-based transaction platform matching borrowers with lenders, and funding, the provision of capital by lenders.

The making of loans, running trading platforms and the administration of making investments is not regulated activity in Guernsey. This means crowdfunding models which provide no investment advice or which make no offers via investment promotions or a prospectus or an investment scheme (I am not going to attempt to define a fund here) are not conducting a regulated activity and fall within the Guernsey definition of a non-regulated financial services business. The Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 requires businesses to register with the Guernsey Financial Services Commission, but has no effect on the conduct of business, except for the carrying out of AML/CFT measures.

However, while the crowdfunding platform is a relatively simple business model and is registered but unregulated, P2P lending increasingly incorporates regulated business as it includes investment in equities or some sort of securities offering. Guernsey's existing funds regime can be used for P2P business. While lending itself is unregulated, investors are increasingly buying shares in a closed-ended investment company or in securities issued by a CEIC.

The CEIC can be listed on an exchange, as can any debt instruments issued by either a CEIC or an open-ended investment company. Guernsey is the most popular domicile for London-listed CEIC's outside of the UK, and the Channel Island Securities Exchange is a very popular and recognised exchange on which to list debt instruments.

P2P business is providing capital to SME's, infrastructure companies and businesses seeking longer-term funding. Lenders are most frequently institutions, pension funds and wealth managers.

Offering illiquid loans through a CEIC with a market listing brings the benefits of adherence to market listing requirements, secondary market liquidity and corporate governance. OEICs and CEICs authorised in Guernsey can lend direct to borrowers under Guernsey's existing regulations. The choice of Guernsey as a domicile also enables fintech entrepreneurs to use the tried and tested PCC and ICC fund structure – structures that have proved very popular with Guernsey's hedge fund and insurance company managers.

So with a mobile industry such as fintech, why use Guernsey as a domicile for the business or the investment securities being offered?

Fintech is a new, fast-developing industry with all the potential risks and rewards that tech businesses can bring. Investors will want the comfort of not adding jurisdiction, legal and operational risk into the mix. Guernsey continues to offer a stable environment to alternative investment fund managers, fiduciary and insurance managers. It has the legal, regulatory and administrative expertise and resource to offer fintech entrepreneurs a domicile from which to grow and prosper.

An original version of this article was published by Business Brief, January 2015.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions