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Comment: "Guernsey's new approach will allay current criticisms"

Guernsey funds lawyer Advocate William Simpson believes regulatory developments will provide a strong competitive base for Guernsey's financial services industry.

Simpson said: 'The changes proposed involve the replacement of the Control of Borrowing Ordinances with a generic Prospectus Law, and of the Protection of Investors Law with a Funds Law covering regulated and registered funds. In certain cases promoters will be able to choose not to be regulated by the Guernsey Financial Services Commission'.

'These developments will be much welcomed by the industry, and represent a focusing of the relevant regulation considerably more upon the service providers and less upon the investment funds themselves'.

'There is no doubt that this approach will allay current criticisms and satisfy the existing requirements of the many professional firms and financial institutions who currently consider Guernsey as a jurisdiction for investment-related activities.  The net result will be higher quality regulation coupled with a much quicker throughput in the establishment of new funds'.

'At the same time other benefits are expected.  The working party has suggested that certain rules which overlap (e.g. the Financial Resources Rules and the Designated Persons Rules) be amalgamated.  Also, there is a proposal that the custody of investments held by regulated funds need no longer be Guernsey based.  However, a regulated fund would still require a Guernsey based custodian to undertake the more general oversight and monitoring role'.

'One other proposal which will similarly be much welcomed is a review of the Restricted Activities set out in the POI Law, which currently indicate the circumstances in which the POI licence is required.  It is proposed that there be more exemptions and carve outs in line with other jurisdictions particularly by reference to different categories of clients.'

Simpson commented that one perhaps unexpected proposal is that there be a single Law in respect of the licensing of all Guernsey financial services businesses, whereas at the moment there are four.

He said: 'Generally, the proposals in the large part echo the mood of the industry and it looks likely that Guernsey will now revise its laws in such a way as to give it a very strong base on which to develop a considerably expanded financial services industry'.

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