The new supervisory framework, which is due to come into effect from June this year, is designed to ensure the island’s 50-plus international pension product providers will be formally supervised for the first time.
The decision to introduce a set of Conduct of Business Rules for domestic and international schemes follows a late-2016 review in which there was strong support from the whole industry.
Firms providing pensions have always been subject to licensing and supervision in Guernsey but the scope of the previous supervisory regime did not extend to pension schemes.
The revised regime will have a transitional period from June to allow firms to fully comply and attain regulated pension status for their pension plans.
The move will bring the channel island’s regime closer into line with those emerging on the Isle of Man, through its recently announced Conduct of Business Code, and an emerging regulatory framework in the United Arab Emirates being introduced by the Insurance Authority.
Common Reporting Standard
Pension firms will also be able to apply for broad exemptions under the Common Reporting Standard (CRS).
“As an early adopter of common reporting we are determined that, come the June 2017 starter’s whistle, Guernsey will be ready to run, not having to hang back because our regulation or compliance isn’t fit for the new event that is CRS,” said Guernsey Finance chief executive, Dominic Wheatley.
The island’s regulator, the Guernsey Financial Services Commission is adding the formation, administration and management of pension schemes to the list of regulated activities set out under the island’s Regulation of Fiduciaries Law.
The rules also include provisions for the regulation of schemes themselves, requiring notification and reporting of scheme data, and which will apply to domestic and international, personal, group and occupational schemes.
The rules will, among other things, enable pension providers in Guernsey to apply for exemptions under CRS.
Stephen Ainsworth, senior partner at BWCI and president of the Guernsey Association of Pension Providers, praised the island’s regulator for moving swiftly to strengthen Guernsey’s competitiveness in the pension sector.
“Guernsey pension providers and administrators will now be ahead of the pack, with a regime that enables the island to meet its reporting obligations at the earliest opportunity while placing the lowest possible burden on the firms. It gives Guernsey providers an edge with a regulated pensions product to market internationally,” he said.
International trend
The move follows a global trend in financial centres to bring legislation into line with the code of conduct issued by the International Association of Insurance Supervisors (IAIS).
Industry regulators from Hong Kong, the UAE and Isle of Man moved forcefully in 2016 to drive forward a campaign for greater transparency on commissions and fees and the fairer treatment of clients across the international life industry.
Under the Isle of Man’s Conduct of Business Code, life insurance companies on the island must provide broad commission disclosure from 1 January 2018 and policyholder specific commission disclosure from 1 January 2019.
The main regulator of life companies in the UAE confirmed in April that it will go ahead with a ban on indemnity commissions, limits to fees and charges on industry products and tighter rules on financial advisers.
