Consumer Credit Regime

Department	Department for the Economy
Start date	05/07/2023
End date	15/09/2023
Type of consultation	White paper
Deadline for comments	15/09/2023

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, as well as 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

Summary consultation paper for businesses

Summary consultation paper for consumers

Regime de Crédito ao Consumidor: Consulta para Consumidores

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 and a voluntary Debt collectors' code of conduct, 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-
Draft Financial Services (Amendment No. 5) (Jersey) Law 202- Explanatory Note

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

How consumers will be affected on YouTube

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

How lending businesses will be affected on YouTube

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

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

Presentation slides on consumer credit regime for consumers

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

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.

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.