Consumer FAQs
Should I invest in Bitcoins or Bitcoin related investments
The Commission urges anyone considering investing in Bitcoins or Bitcoin related investments to act with extreme caution. There are signs that the current valuations of Bitcoins are being enhanced by speculative investment flows. Whilst we appreciate some of those holding Bitcoins over the last 12 months may have made very good financial returns, we would encourage all potential investors to remember that Bitcoins are not backed by underlying assets and that it is possible that those investing in them could see very large losses rather than good returns with the risks being very similar to those associated with gambling.
What is a mini-bond?
Mini-bonds became popular in the UK after the financial crisis. They are issued by small companies as a means of raising money. This is an alternative method of finance for the company (the issuer) to borrowing from a bank. Because the company issuing the bonds may be very small and just starting out, these are high risk investments with correspondingly high yields. Consequently, mini-bonds have been attractive to people seeking higher interest rates in the continuing low interest rate environment. Mini-bonds are not traded on a stock exchange and so are only repayable by the company at maturity.
Mini-bonds are not directly authorised by the Commission nor by the FCA and, in the UK, are not covered by the Financial Services Compensation Scheme (“FSCS”). Similarly, there is no compensation scheme for those who invest in mini-bonds offered by local companies.
Should I invest in mini-bonds?
The Commission urges anyone considering investing in mini-bonds to act with caution. Whilst the interest rate offered by the issuing company may appear attractive in comparison to the interest rates available, for example, on fixed term deposits, mini-bonds carry a higher level of risk. You should consider these risks very carefully. In extreme, if the company issuing the mini-bonds were to fail, you could lose all the money that you invested.
Whilst we appreciate that some mini-bonds may have made, or offer, very good financial returns, we would encourage all potential investors to remember that mini-bonds are not necessarily backed by underlying assets. It is possible that those investing in them could see very large losses rather than good returns.
What should I do if I think I have fallen victim to a scam?
If you think you may be a victim of a payment fraud, you should contact your bank or card provider in the first instance, and then report it to Guernsey Police. Likewise, if you have lost money to an investment fraud you should contact Guernsey Police. More information can be found here.
What is an Authorised Push Payment (APP) fraud?
Authorised Push Payment (APP) fraud happens when fraudsters deceive consumers or individuals at a business to send them a payment under false pretences, to a bank account controlled by the fraudster.
This can be as simple as fraudsters requesting payment for goods that do not exist, invoices being issued for services which have not been carried out, or if, for example, an individual’s online banking has been hacked or intercepted.
More information can be found here
What is identity theft?
Identity theft can occur if someone steals your personal data (such as your name, address and date of birth) and uses your details for themselves such as opening bank accounts, making purchases or claiming benefits, whilst pretending to be you, and without your consent.
What should I do if I think that I have been a victim of identity theft?
In the first instance, you should contact Guernsey Police, their details can be accessed here. If you believe that there have been suspicious transactions on your bank account, you should report it to you bank immediately.
Who should I contact if I have concerns about how my personal data is being used?
In the first instance you should raise your concern, in writing, with the entity who you think may be mis-using personal data. Explain to them which of your 10 rights you want to exercise, where appropriate. Make sure you keep a copy of your letter. Remember that whilst you can make this request – they may be able to refuse it whilst still acting within the Law but they should tell you their reasons for refusing.
The Office of the Data Protection Authority (ODPA) is an independent regulatory authority that was established for the purposes of data protection in the Bailiwick of Guernsey. Follow the ODPA’s quick guide to exercising your rights if you do not receive a satisfactory response from the entity you’ve contacted with your concerns. If you have questions about your rights you can contact the ODPA.
The ODPA has also released guidance on how to protect yourself from identity theft and scams.
Has Guernsey got a Deposit Compensation Scheme in place?
Yes, there has been a Scheme in place since November 2008. More information can be found here.
How can I find out whether my deposit is covered by the local Deposit Compensation Scheme?
You can find out more on the Scheme’s dedicated website, a link to which can be found here.
I am having difficulty finding a bank which will open an account for me due to my poor credit history, what options do I have?
Most high street banks offer a ‘basic bank account’, which are particularly designed for people with poor credit histories, who can have difficulty opening other types of bank accounts. More information on this can be found here.
I am looking to switch to another bank. I have heard of the Current Account Switch Service. What is this, and is it something I can use in Guernsey?
The Current Account Switch Service is a free-to-use account switching service, which is offered by some of the high street banks in Guernsey. Your bank will be able to tell you if they offer this service locally. More information can be found here.
I want to make a complaint against my bank. How would I go about doing this?
If you wish to make a complaint against a bank, you can find more information here.
Is there a Financial Ombudsman in Guernsey?
Yes, the Channel Islands Financial Ombudsman was established on the 16 November 2015 and is situated in Jersey. Click here for further information.
I have a complaint about a loan issued by a local provider. Can I refer this to the Commission?
If you have a complaint against a local loan provider you can find out more information on the Commission’s Complaints pages about the next steps available to you.
I think I may have been mis-sold an interest rate hedging product. What should I do?
The Commission would suggest that you get in touch with your bank in the first instance. More information can be found here.
What should I do if the collective investment scheme I have invested in has been liquidated?
If you learn that a collective investment scheme (CIS) in which you have invested money has been liquidated, and you have not received the entire amount of the value of your investment, you should address your complaint directly to the liquidator of the CIS. You will need to provide documentation which shows the valuation of your investment.
You may also wish to make a complaint to your pension fund administrator, if you feel the advice it gave to you did not meet your requirements in terms of the suitability of the category of investments it made on your behalf. If the complaint is not resolved to your satisfaction, you may then wish to refer it to the Channel Islands Financial Ombudsman.
Are Guernsey collective investment schemes covered by any compensation scheme?
The Collective Investment Schemes (Compensation of Investors) Rules 1988 (as amended) provide for compensation for investors in Class A schemes, of up to £5m in any year. Subject to this limit, the maximum compensation payable per investor is 90% of the first £50,000, and 30% of the balance, up to £100,000 (1.e. a maximum total of £60,000).
There is no compensation scheme covering investors in Class B schemes, Class Q schemes, authorised closed ended investment schemes, or registered collective investment schemes.
What is the Guernsey Registry of companies and partnerships?
All companies, limited partnerships and limited liability partnerships wishing to be formed in the Bailiwick of Guernsey must first be set up at the Guernsey Registry. In other words, they need to be ‘registered’ at the company registry.
Put simply, a company registration creates a legal entity, generally this enables that entity to carry out any business that is legally allowed in the Bailiwick or elsewhere.
Companies, limited partnerships and limited liability partnerships not offering financial services and products, would generally only need to be registered, and would therefore not require a licence from the Guernsey Financial Services Commission.
Businesses offering financial services and products that are formed or registered outside of the Bailiwick but wish to provide these in or from within the Bailiwick must apply for a licence to do so from the Commission.
Companies and other entities registered at the Guernsey Registry are required to pay an annual fee to the Guernsey Registry and file a return confirming certain information. Failure to do so would incur a financial penalty and ultimately, if not paid, the business will be removed or “struck off” from the Register.
More details on the Guernsey Registry can be found here.
A list of all entities that are registered by the Guernsey Registry can be found here.
What is a Regulated Business?
In order to carry out any financial activity such as banking, insurance, investment or fiduciary services in the Bailiwick of Guernsey, a business must obtain a licence from the Commission.
Before a licence is issued, the Commission will establish whether the business meets the minimum licensing requirements – for instance whether the business is proposed to be offered with professional skill and integrity, and whether the owners / directors / managers are fit and proper, in other words, do they have the competence, experience, sound judgement, qualifications and understanding of their legal and professional obligations.
Where these and other requirements set out in the relevant laws are considered satisfactory to the Commission, the financial services business will be issued with a licence. At this point it becomes a ‘regulated’ entity.
A regulated financial services business is required to comply with the relevant laws and other regulatory requirements that apply to that business in respect of the financial product or service that it offers, at all times.
The Commission carries out its supervision of regulated entities through several means, including regulatory returns, site visits and meetings with licensees. This is to ensure that they continue to meet the minimum licensing criteria, and are not likely to negatively impact the reputation of the Bailiwick of Guernsey as a finance centre.
The Commission applies a risk based approach to its supervision and will concentrate its finite resources on those businesses that are perceived could create the most harm to it meeting its objectives.
Where a financial services business does not comply with the relevant requirements, the Commission, as the financial services regulator for the Bailiwick, may take a range of actions. However, this would depend on the level of seriousness of the issue and could result in having licence conditions imposed, financial penalties, or public statements being issued. Ultimately, an entity could have its licence revoked by the Commission.
Please be aware that just because a financial services business is regulated, does not mean that you as a consumer need not apply caution. You are still encouraged to take your own precautions. Financial products are risky by their very nature, and some are more risky than others. As a consumer, you have to determine the level of risk you are willing to accept.
The Commission’s responsibilities do not extend to reviewing the financial performance of products, so you should be very clear as to your objectives before signing up to a service or product. As a potential, or existing, customer you are strongly encouraged to read all the product literature and terms and conditions associated with a proposed product or service. This is to ensure you are fully informed of any pre-requisite requirements, risks and conditions attached to the proposed product or service. Where something is not made clear, or legal jargon is used, you should not be afraid to ask the person offering the financial product or service to explain this, as well as the pros and cons of the product, and all the terms and conditions accompanying it.
A list of all the entities regulated by the Commission can be found here.
What is a Prescribed Business?
Prescribed business is the term used for firms of legal professionals, accountants and estate agents carrying on business in or from within the Bailiwick of Guernsey.
Prescribed businesses are required to be registered with the Commission – which is different to being registered at the Guernsey Registry.
These businesses are required to be registered by law. They are not subject to an application process and the Commission supervises these businesses with regard to their compliance with the local anti-money laundering and countering the financing of terrorism legislation.
A list of all prescribed businesses registered with the Commission may be accessed here.
What should I know when buying Financial Products and Services outside of the Bailiwick?
Top 5 tips:
- If you decide to seek financial advice, or buy a financial product from outside of the Bailiwick, be aware of the risks involved.
- Ensure that the person or firm is also licensed and regulated in the relevant jurisdiction.
- Financial providers who are not licensed in the Bailiwick should not be approaching you.
- If you are approached by a financial provider from outside the Bailiwick, please advise the Commission.
- It is advisable to check whether the particular jurisdiction has a deposit or investor compensation scheme in force, whether you would be covered, and what level of cover it offers.
You are able to seek financial advice or purchase financial products from outside the Bailiwick, but you should be aware that the Commission will not have any regulatory remit over such providers. There is a risk that the provider, if not regulated by an equivalent body to the Commission, may not be acting in your best interest and you may be left with limited options to take action against them.
If you are considering taking this route, you should make enquiries to ensure the financial services provider is indeed licensed and regulated abroad, by a similar regulatory body to the Guernsey Financial Services Commission, and that adequate consumer protection is available to you.
In contrast, a financial adviser, or financial services provider who approaches you from abroad, without you initiating it, is prohibited under the Bailiwick of Guernsey laws. They are required to be licensed in Guernsey in order to do so. If you are approached by a firm that is not licensed, please advise the Conduct Unit at the Commission on [email protected] or telephone us on 01481 712706.
For a list of all the financial services businesses licensed and regulated in Guernsey, please click here. For the Commission’s up-to-date list of warnings, please click here.
Remember the saying – if it looks too good to be true, it probably is!
Can I use a payment service provider which is based outside the Bailiwick?
Yes you can, though you may wish to check whether the payment service provider is appropriately licenced in its home state.
Does a payment service provider outside the Bailiwick need to be registered or licenced by the Commission if it has customers inside the Bailiwick?
Payment service providers based outside the Bailiwick do not need to be registered or licenced with the Commission unless they specifically target Bailiwick customers.
What do you mean by ‘specifically target Bailiwick customers’?
Targeting refers to specific advertising or promotion of services in the Bailiwick, such as advertising in the Guernsey press, on local radio or sending representatives to canvas local business. It does not include using a website or advertising on social media, unless this is specifically directed to Guernsey customers.
As a business, do I need a licence from the Commission if I use a payment service provider on my website?
No.
Should I invest in an Initial Coin Offering (ICO)?
The term ICO refers to a digital way of raising funds from the public using a virtual currency, also known as cryptocurrency. An ICO can also be known as ‘token sale’ or ‘coin sale’. They are very high-risk speculative investments.
ICO issuers accept a cryptocurrency, like Bitcoin or Ether, in exchange for a proprietary ‘coin’ or ‘token’ that is related to a specific firm or project. ICOs may represent a share in a firm, a prepayment voucher for future services or in some cases offer no discernible value at all. Often ICO projects are in a very early stage of development.
The Commission, along with several other regulators, has issued an advisory notice regarding the risks of investing in an ICO. Most ICOs are unregulated. This means that it is unlikely that there will be any investor protections if anything goes wrong with an investment in an ICO. As with other cryptocurrencies, the value of the investment is volatile and has the potential for fraud. The Commission would not expect ICOs to be sold to, or bought by, retail investors. Anyone considering buying an ICO should carry out full research on the ICO project and be prepared to lose the entire value of their investment.
What is Ring-fencing?
Further information about ring-fencing can be found here
Why have a Pension?
Pensions are effectively a long term savings plan. Pensions are a good way of saving for your retirement. The Commission has issued a Helpsheet on pensions which is available here.
Should I notify my pension provider about a change of address?
When moving address, you should seek to notify your pension provider that you are doing so. Recent research commissioned by the Association of British Insurers ("ABI"), found that there are around 1.6 million pension pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pension pot. This comes as a result of individuals not notifying their pension provider of their change of address.
This research was based in the UK but still remains relevant to Guernsey residents, particularly if you have made pension contributions in the UK at some point in your career, or have made contributions to a UK insurer. The full article regarding the research can be found here.
Where can I purchase foreign currency and currency cards?
You can purchase your travel money at:
- banks
- Post Offices
- Online specialist websites
- Some travel agents
There are many different foreign exchange providers, therefore you may wish to do some research and shop around for the best deals. Foreign exchange providers will be able to show you how much you will get for your money once the exchange rate and any charges have been taken into account. Make sure to ask upfront about fees and charges payable.
Normally, the bureaux de change at airports, train stations and ferry ports are more expensive than at the high street and online providers.