Government of Jersey Consultation: Consumer Credit regime [lenders regulation]  

The proposals for a consumer credit regime aim to regulate consumer credit firms engaging in lending or related businesses involving consumers. Consumer credit firms must seek authorisation from the Jersey Financial Services Commission (JFSC) and comply with minimum governance requirements for obtaining a license.

The new regulatory regime is expected to apply to all new regulated agreements and arrangements, with possible transitional provisions for pre-existing agreements. The draft Law is planned to be submitted to the States Assembly by December 2023, and if approved, come into effect by the end of 2024. The JFSC will consult on secondary legislation and Codes of Practice before implementation.

The government welcomes feedback and opinions on the proposed consumer credit regime and provides a list of questions for reference in the consultation paper. The deadline for responses is 15 September 2023.

• https://www.gov.je/Government/Consultations/Pages/ConsumerCreditRegime.aspx

About the consultation

The Government wants to protect consumers from abusive lending practices and enable them to make well-informed decisions when using credit providers and other credit services such as credit advice, debt collecting, and administration.

We also want:

• to give clarity to businesses that will be regulated under the proposed regime.
• to ensure that the regime is practicable to implement and
• The regime is compatible with existing regulatory requirements in neighbouring British jurisdictions.

This consultation seeks your views on the proposed legislative changes.

• Full consultation paper for Consumer Credit Regime
• https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Consumer Lending Consultation Full Consultation Paper.pdf

Summary consultation paper for businesses

• https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Summary of proposals of Consumer Credit Regime for businesses.pdf
• Summary consultation paper for consumers
• https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Summary of proposals of Consumer Credit Regime for consumers.pdf

Regime de Crédito ao Consumidor: Consulta para Consumidores

• https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Regime de Cr%C3%A9dito ao Consumidor Consulta para Consumidores.pdf

Current position

Although there are some protections in place, lending money to people is not currently regulated in Jersey, except:

• against money laundering and the financing and carrying out of terrorism
• against unfair commercial practices towards consumers and aggressive selling techniques and misinforming or misleading people about products or services
• for banks whose deposit-taking is already supervised by the Jersey Financial Services Commission (JFSC)

There is.

• a voluntary Consumer Lending Code of Practice https://www.gov.je/StayingSafe/ConsumerProtection/BorrowMoney/Pages/CodeConsumerLending.aspx
• and a voluntary Debt collectors' code of conduct, https://www.gov.je/StayingSafe/ConsumerProtection/DebtCollection/Pages/CodeDebtCollection.aspx

but neither are compulsory, and compliance is not currently overseen by a regulator.

Proposed changes.

The changes set out in the draft Financial Services (Amendment No.5) (Jersey) Law202-, will:

• Set the scope of the new regulatory regime.
• Provide additional powers to impose substantive requirements on the providers of consumer credit and ancillary services

Draft Financial Services (Amendment No. 5) (Jersey) Law 202- = https://www.gov.je/SiteCollectionDocuments/Industry and finance/2023.05.22 - FinancialServices(AmendmentNo.5)Law202-_Draft 11.pdf
Draft Financial Services (Amendment No. 5) (Jersey) Law 202- Explanatory Note = https://www.gov.je/SiteCollectionDocuments/Industry and finance/2023.05.22 - FinancialServices(AmendmentNo.5)Law202-_EXN Draft 11.pdf

What the proposals mean for consumers

The intention is for the new law to protect people who borrow money by establishing regulatory standards which people who lend money will be required to follow. Those who will benefit are:

• individuals, irrespective of their personal wealth or circumstances, provided they are acting wholly or mainly outside of their trade, business, or profession
• small businesses where the person employs less than 10 full-time employees and which have a balance sheet or turnover that does not exceed GBP 2 million

The proposed regime is wide-ranging and includes:

• personal loans (including from banks)
• credit extended by debt collection agencies
• mortgages over Jersey properties which are the consumer’s primary residence
• credit provided as part of debt-adjusting and debt administration services
• business loans to small businesses up to £30,000
• personal contract purchase financing/balloon loan (typically used for car finance)
• store credit
• linked credit
• hire purchase
• pay day loans
• overdrafts
• buy now pay later loans

Summary of proposals and consultation questions for consumers = https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Summary of proposals of Consumer Credit Regime for consumers.pdf

How consumers will be affected on YouTube = https://www.youtube.com/watch?v=Mw1lmqJ5VFY

Lenders and lending-related activity

The proposed regime is wide ranging. It will cover any cash loan and any other form of financial accommodation. This includes:

• consumer credit agreements
• consumer hire agreements
• secured lending arrangements. Commonly referred to as mortgages

In addition to lending, the types of activities that will be caught by the proposed regime are:

• advising on, administering, and arranging regulated agreements and arrangements
• credit broking in respect of regulated agreements and arrangements
• debt related activities such as debt adjusting, debt counselling, debt collecting and debt administration

Anyone undertaking these activities will be required to obtain a licence from the JFSC towards the end of 2024 and will be subject to a set of standards set out the proposals.

Summary of proposals and consultation questions for businesses = https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Summary of proposals of Consumer Credit Regime for businesses.pdf

How lending businesses will be affected on YouTube = https://www.youtube.com/watch?v=C8CNzOyKLmE

Private lenders

All lending activity, unless explicitly exempted from legislation, is in scope of the proposed regime if it is being carried out “by way of business”.

If you lend money, including as a private citizen and do so “by way of business”, you will become regulated for consumer credit business under the proposed amends to the Financial Services (Jersey) Law 1998 from the end of 2024.

A good practical barometer for determining whether you are lending “by way of business” and required to register with the JFSC for a licence, is whether you are required to register with the JFSC for Anti-Money Laundering, Countering the Financing of Terrorism and Countering Proliferation Financing (AML, CFT and CPT) purposes.

Any of the following factors may indicate you are lending “by way of business” irrespective of whether you are a company lending money or a private individual loaning funds:

• lending is frequent
• lending is on commercial terms with regular repayments or has a set or indicative final date for repayment
• loans are secured to ensure repayment of the loan, such as a mortgage
• interest is paid on the loan or a fee is charged

There is a section specific for private lenders in the questionnaire.

How private lenders will be affected on YouTube = https://www.youtube.com/watch?v=fApAgsYLU7k

Public meeting dates

​For a one-to-one conversation about the proposals, come to a drop in session. The sessions are open to all businesses, private lenders and consumers. They take place at Jersey Library 12pm to 2pm on:

• Thursday 20 July 2023
• Thursday 10 August 2023
• Thursday 17 August 2023
• Thursday 24 August 2023
• Thursday 31 August 2023

You do not need to book.

Briefing sessions

We provided briefings for businesses, private lenders and consumers:
Presentation slides on consumer credit regime for businesses https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Presentation Consumer Credit Slides (Businesses).pdf

Presentation slides on consumer credit regime for consumers https://www.gov.je/SiteCollectionDocuments/Industry and finance/C Presentation Consumer Credit Slides (Consumer).pdf

If you represent an organisation, you can organise a briefing for your members by contacting economy@gov.je

How to submit comments to the consultation

The proposals have been outlined in detail the consultation papers. You can provide feedback on any and all of the proposals.

The survey questions differ for those responding as a borrower and those responding as a lender. You can respond as both, provided that you do so separately.

Complete the consumer credit regime survey

https://survey.gov.je/s/GXLSJM/

• by email to Economy@gov.je
• by post to
  FAO Julie Keir
  Associate Director of Financial Services
  Department for the Economy
  19-21 Broad Street
  St Helier
  JE2 3RR

This consultation paper has been sent to the Public Consultation Register. It has also been provided directly to the following organisations:

• Jersey Financial Services Commission
• Channel Islands Financial Ombudsman
• Institute of Directors – Jersey Branch
• Jersey Chamber of Commerce
• Jersey Business
• Jersey Consumer Council
• Citizens’ Advice Jersey
• Jersey Trading Standards
• The Law Society of Jersey
• The Viscount’s Department
• The Royal Court of Jersey
• The Law Officers' Department
• Jersey Finance Limited
• Jersey Bankers Association
• Jersey Association of Trust Companies
• STEP Jersey
• Jersey Funds Association
• Association of Restructuring and Insolvency Experts – Jersey Branch
• Jersey Motor Trades Federation
• Age Concern Jersey
• Personal Finance Society (Jersey)
• Legislative Advisory Panel
• Jersey Landlords Association
• Jersey Farmers Union
• Jersey Construction Council
• Jersey Estate Agents Association

Data protection

The information you provide will be processed in compliance with the Data Protection (Jersey) Law 2018. For more information see the

• Department for the Economy privacy notices. https://www.gov.je/Government/Departments/PrivacyPoliciesRetentionSchedules/EconomyPrivacyPolicies/Pages/DepartmentFinancialServicesandDigitalEconomyPrivacyNotice.aspx

Under the Freedom of Information (Jersey) Law 2011, information submitted to this consultation may be released if a Freedom of Information (FOI) request requires it, but no personal data may be released.