GUERNSEY Law and Practice Contributed by: Matthew Brehaut and Tom Carey, Carey Olsen
4.3 Sources of Funds for Fiat Currency Loans Sources of funds for fiat currency loans could potentially include peer-to-peer, lender-raised capital, taking deposits, and securitisations. The legal and regulatory issues depend upon whether the funds are raised in or from within Guernsey. Lenders carrying on “deposit-taking business” (in summary, using deposits received from one person to lend to another or otherwise finance its activities) in or from within Guernsey will need to comply with The Banking Supervision (Bailiwick of Guernsey) Law 2020, as well as its associated legislation and rules and guidance. The LCF Law imposes a licensing requirement for the operation of a peer-to-peer platform, the operation of a crowdfunding platform, and the provision of alternative non-bank credit or finance intermediation. Securitisation vehicles are more lightly regulated in Guernsey, as they are typically not regulated as collective investment schemes. 4.4 Syndication of Fiat Currency Loans Guernsey law does not specifically provide for the regulation of the syndication process, which usually takes place onshore. Lenders should therefore ensure they comply with the syndica - tion requirements of any relevant jurisdiction in which syndication is being conducted.
provisions relating to client order priority, timely execution, and best execution.
4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities
The LCF Law regulates lending in or from within Guernsey and draws a distinction between the lending to individuals (broadly, consumer credit and mortgage lending ( “regulated agreements” )) and lending to companies. There are significant differences in the regulation applicable to these types of lending, as set out in The Lending, Credit and Finance Rules and Guidance 2023 . Additional requirements are imposed on regulat - ed agreements ‒ for example, disclosures about annual percentage rates and total charges for credit, repayment fees, and restrictions on unfair agreement terms. Guernsey tax-resident companies and part - nerships are also required to comply with the Guernsey economic substance regime. In this context, this means those substance require - ments applicable to businesses conducting the activity of “financing and leasing” business (ie, agreeing funding terms). 4.2 Underwriting Processes Guernsey law does not specifically provide for the regulation of the underwriting process, which usually takes place onshore. Lenders should therefore ensure they comply with the under - writing requirements of any relevant jurisdiction in which the underwriting process is being con - ducted.
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails
There are no restrictions upon the use of exist - ing payment rails or the creation or implemen -
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