In our previous article (which can be found here), an overview of the different parts of the Law were discussed.

This article will focus on Part III of the LCF Law: Regulation of Financial Firm Business (FFB).

A Part III FFB Licence is required where a FFB is not a regulated business and where the FFB’s activities are not deemed to be incidental and other activities.

Where a FFB is regulated by the Guernsey Financial Services Commission (GFSC) under a different regulatory law in Guernsey, the licensees are not required to hold a Part III FSB Licence but they may be required to comply with parts of the LCF Law under additional rules. There are no such rules in place at this time but we still await further clarification from the GFSC.

FFB activity includes business which was previously protected by the NRFSB legislation which was fully repealed on 1 July 2023.

Any entity previously registered as a financial services business under the NRFSB legislation will need to be licenced as a financial form business under the LCF Law subject to the LCF Notice (see below).

The new regime provides appropriate regulation to additional business which may not otherwise be captured by other regulatory legislation.

What is a Financial Firm Business?

The LCF Law provides that a person is prohibited to provide, offer or carry out any activities:

  • by way of business,
  • for with or on behalf of a customer

Any person who conducts an activity listed in Part A of Schedule 1 to the LCF Law (and set out below) is a Financial Firm Business (either in Bailiwick or as a Bailiwick body within any place wherever and whether by digital or others means):

  • lending;
  • financial leasing;
  • operating a money service business;
  • buying, selling or arranging the buying or selling of, or otherwise dealing in, bullion or buying or selling postage stamps (subject to certain exceptions);
  • facilitating or transmitting money or value through informal money or value transfer system or network;
  • issuing, redeeming, managing or administrating means of payment;
  • providing financial guarantees or commitment;
  • trading – (by way of sport, forward, swaps, futures, options etc.) in:

– money market instruments

– foreign exchange, interest rate or index instruments; and

– commodity futures, transferrable securities or other negotiables;

  • instruments or financial assets;
  • participating in securities issues and the provision of financial services related to such issues;
  • providing settlement or clearing services for financial services;
  • providing advice to undertakings on capital structure, industrial strategy or related questions, on mergers or the purchase of undertakings, except where the advice is provided in the course of carrying on the business of a lawyer or accountant;
  • money broking;
  • money changing;
  • providing individual or collective portfolio management services or advice;
  • providing safe custody services;
  • providing services for safekeeping and administration of cash or liquid securities on behalf of customers or clients;
  • carrying on the business of a credit union;
  • accepting repayable funds other than deposits; and
  • otherwise investing, administrating or managing funds or money on behalf of other persons;

What is “By way of Business”?‘

A legal person provides a service or carries on an activity by way of business where it is done in return for any income, fee, emolument or other consideration in money or money’s worth.  To fall within the scope of the LCF Law, a person must be doing the activity by way of business.


There are essentially two types of exemptions which apply to a Part III Licence:

  • LCF Exemptions – arising from the disapplication of the requirement to hold a licence under section 40 of the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (LCF Notice); and
  • LCF Law – s20(1) exemption

If you do not fit within these exemptions there may be certain circumstances which would allow a person to apply to the GFSC for a discretionary exemption (see below).  Without  an exemption,  a licence must be applied for.

The following exemptions should be considered carefully to determine whether a licence is required.

LCF Notice Exemptions

The majority of the exemptions are to be found in the LCF Notice.  They are as follows:

  • Persons who carry out lending to family members.
  • Persons who carry out lending to family members, where that entity is wholly owned by related family members (whether or not that credit is extended to the owners of that entity).
  • Persons who carry out lending to their registered directors, registered partners, registered shareholders, or beneficial owners.
  • Registered directors, registered partners, registered shareholders, or beneficial owners who carry out lending to associated entities.
  • Persons who carry out lending to their employees
  • Guernsey trustees who carry out lending to named beneficiaries of the trust from which the credit is sourced.
  • Persons who carry out lending and are administered by a licensee which holds a licence under the Protection of Investors (Bailiwick of Guernsey) Law, 2020
  • Persons who carry out lending and are administered by a licensee which holds a licence under the Regulation of Fiduciaries Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020.
  • Persons who carry out lending and are administered by a licensee which holds a licence under the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002.
  • Individuals, who are investors, who carry out lending to administered entities.
  • Persons who carry out lending internally, within the group structure to which they belong, where the lending entity [which] has an established place of business in the Bailiwick of Guernsey.
  • persons, whose established place of business is within the Bailiwick, who carry out lending to other entities whose established place of business is also within the Bailiwick.
  • Entities holding a Part III VASP licence issued under the Law.

Many of these exemptions are further caveated in the LCF Notice itself, so if it appears that an exemption may be applicable we recommend that a review the LCF Notice and seeking independent legal advice to confirm.

The exemptions are wide ranging and appear to cover most business activities carried out by a TSP or regulated entity for and on behalf of its clients.

We recommend that an audit of all files is undertaken to ensure that where any proposed activity falls within the LCF Law and/or where it is in scope and no exception is available, an application can be made for a licence as soon as possible.

Section 20(1) of the LCF Law Exemption

Section 20 (1) of the LCF Law exempts an FSB from the need to have a licence under the LCF Law where all other following apply (it is a very limited exemption):

  • The total turnover in respect of financial firm business of the person carrying on the business in question does not exceed £50,000 per annum;
  • The business in question does not carry out occasionally transactions (that is defined by the LCF Law to mean any transaction involving more than £10,000, carried out by the business in question in the course of that business, where no business relationship has been proposed or established. Including such transactions carried out in a single operation in or two or more operations that appear to be linked;
  • The business in question does not exceed 5% of the total turnover of the person carrying on the business;
  • The business in question is ancillary, and directly related, to the main activity of the person carrying on the business;
  • The business in question does not facilitate or transmit money or value by any means;
  • The main activity of the person carrying on the business in question is not that of a financial firm business; and
  • The business in question is provided only to customers of the main activity of the person carrying on the business and is not offered to the public.

It is important for businesses to keep records of the reasoning behind why do they do not think a licence is required or indeed that they feel the works falls under an exemption.

If an exemption is granted to an individual or firm, the exemption would last for a maximum of 3 years after which time, the exemption will need to be reviewed and renewed.

It is recommended to seek independent legal advice to avoid any issues.

For a Part III LCF Licence there is no exemption of equivalence such as there is for a Part II Licence.  It does not matter if the FFB is licenced elsewhere in an equivalent jurisdiction to undertake similar business, a Guernsey Part III LCF  licence is required.

Other exemptions

The LCF Law also allows for exemptions to be specified under regulations of the States of Guernsey Policy and Resources Committee but to date there are no such exemptions in place.

Discretionary Exemptions

There is no need to obtain confirmation from the GFSC that a licence is not required.  We recommend that the review process undertaken to determine this, together with any independent legal advice, is recorded in the corporate records.  If, however, an activity is being undertaken that it is considered should not require a licence but appears to fall within the legislation, a discretionary exemption can be applied for.

How to get a discretionary exemption?

At any time, a discretionary exemption may be sought from the GFSC.

These applications are assessed on a case-by-case basis. The discretionary exemption application form can be found on the GFSC website. There is a fee for the application, which is currently (at the time of writing)  £1,270 for a company or partnership, or £570 for an individual.


So, to reiterate A Part III FFB Licence is only required where:

  • the financial firm business is not a “regulated business”;
  • the financial firm business’s activities are not “incidental and other activities”; and
  • no exemption is available under the LCF Law or the LCF Notice

So, do I need a licence?

The questions to consider for a Part III licence are:

  • Does the activity fall within the scope of the LCF Law?
  • Is the activity covered by an exemption?
  • Can we apply to the GFSC for a discretionary exemption?


A financial firm business that is already, or planning to conduct the above-mentioned activities is required to obtain a licence. Further information on how to apply for a licence and the application form can be found here.

The GFSC, on granting a licence, may impose certain conditions which a financial firm business will have to comply with. Examples of such could include any of the following:

  • A financial firm business may have to take certain steps to refrain from adopting or pursuing a particular course of action or to restrict the scope of its business in a particular course of action or to restrict the scope of its business or particular way.
  • Limitations relating to the acceptance of business.
  • Prohibit the licensees from soliciting (whether at all or in any specified manner), business either generally or from particular persons or class of persons.
  • Prohibit the licensee from entering into any other transaction or class or description of transactions.
  • Require the removal of any person who is the holder of a supervised role in respect of, or who is officer or auditor of the licensee.
  • Provide the GFSC with information and documents required at particular times.
  • Specify requirements as to capitalisation and liquidity or margin of solvency of the business of the licensee.
  • Require the licensee to obtain professional indemnity insurance of such amount and upon such terms and conditions as may be specified.
  • Prohibit or impose limitations on the carrying on of the business regulated by the LCF Law or any class or description of such business in or from within any place or any place outside the bailiwick by the licence itself, by an undertaking established by the licensee.
  • Any provision in whatever form and manner and whatever time the GFSC may reasonably determine of evidence of compliance with the provisions of this Law or regulatory laws.

An individual operator or firm which fails to obtain a licence (and is otherwise required to do so) will be in breach of the LCF Law and therefore guilty of and offence. This may result in a fine or imprisonment and removal of directors or officers, depending on the nature of the breach.

For more specific advice on the LCF in Guernsey, please contact either Jeremy Berchem or Lisa Upham.

LCF Law and Guidance – where to find it?

A copy of the LCF law may be found here. Accompanying Lending, Credit and Finance Rules and Guidance, 2023 (LCF Rules) and a notice with respect to the disapplication of the requirement to hold a licence under section 40 of the LCF Law (LCF Exemptions) have also been issued by the Guernsey Financial Services GFSC (GFSC). The GFSC has also issued the Lending, Credit and Finance (Designated Jurisdiction) Regulations, 2023 which confirms that the United Kingdom is a designated jurisdiction for the purpose of s10(3) of the LCF Law and equivalence purposes. A series of FAQs have also been created to assist with the interpretation and guidance of the LCF Rules and LCF law. They may be found at These are regularly updated and the most recent ones relate to Lombard Lending provisions.

Key Contacts

Jeremy Berchem

Group Partner*: Guernsey

T +44 (0)1481 755 601
E Email Jeremy

Stuart Tyler

Partner: Guernsey

T +44 (0)1481 755 606
E Email Stuart

Lisa Upham

Professional Support Lawyer: Guernsey

T +44 (0)1481 755 605
E Email Lisa

Paula Fry

Counsel: Guernsey

T +44 (0)1481 755 907
E Email Paula

Leona Maharaj

Senior Associate*: Guernsey

T +44 (0)1481 755 612
E Email Leona

Omolola Botsane

Associate*: Guernsey

T +44 (0)1481 755 613
E Email Omolola

Raphael Chitambira

Associate*: Guernsey

T +44 (0)1481 755 602
E Email Raphael

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