Effective January 2026, new rules will come into effect and establish an equity release regime in Guernsey.
The Guernsey Financial Services Commission (GFSC) has published its Feedback Paper outlining amendments to the Lending, Credit and Finance Rules and Guidance, 2023 (LCF Rules). There are also a number of elements that will be incorporated in changes to the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (LCF Law). This follows a December 2024 consultation proposing to regulate equity release products, namely, lifetime mortgages and home reversion plans in the Bailiwick. The regime will take effect 1 January 2026, with key implications for financial advisers.
Aims of the new regime
The primary goal of these regulatory changes is to provide robust consumer protection while ensuring that advisers and providers operate within a consistent and transparent framework. The GFSC has largely mirrored the UK’s FCA Rules and the Equity Release Council's member standards, adapting them to Guernsey’s legal and market environment.
The GFSC received 19 consultation responses from industry participants. There was broad consensus supporting the regime, with particular emphasis on adviser qualifications, the handling of vulnerable clients, and the importance of tailored, holistic advice.
What does this mean for advisers?
Local licensing requirement
All equity release advice must be provided by a locally licensed equity release adviser. Advisers based outside the Bailiwick will not be permitted to provide regulated equity release advice, even if they are authorised in the UK.
- Local licensing is mandatory to ensure understanding of Guernsey-specific legal, property and regulatory frameworks.
- Applications to vary existing LCF licences or obtain a new equity release advisory licence open on 1 January 2026.
Qualification standards
To provide advice on equity release products, advisers must hold an "approved equity release qualification" which is one whose syllabus has covered both lifetime mortgages and home reversion plans.
- A transition period is in place: all advisers must meet qualification requirements by 1 January 2028.
- The GFSC has introduced an amendment to the LCF Rules to ensure that historic qualifications cover both product types adequately.
- "Four-eyes" review by a second qualified person is encouraged, but not mandated.
Guidance on vulnerable clients and suitability
The GFSC recognises that equity release customers are more likely to be vulnerable, due to age, financial distress or long-term care needs. However, it has not mandated automatic classification of all equity release clients as vulnerable.
- Firms must assess vulnerability on a case-by-case basis and tailor their service accordingly.
- Advisers must exercise judgment and comply with the LCF Rules on vulnerability.
- Updates have been made to align with the Capacity (Bailiwick of Guernsey) Law, 2020, clarifying when a formal capacity assessment may be necessary.
Client communication and legal advice
Key-Facts Illustrations
Advisers must provide clients with clear, comprehensive Key-Facts Illustrations, containing all of the information specified in Schedule 5 of the LCF Rules.
Involving family
While not required, advisers should facilitate opportunities for clients to involve family members in the advice process. Final decisions, however, rest with the client.
Legal advice
- Mandatory for home reversion plans.
- Strongly recommended (but not mandatory) for lifetime mortgages.
- Rule 7.18 clarifies the role of the independent legal adviser as a safeguard, not a product suitability assessor.
Licensing, fees & limited permissions
Licence categories
- Equity release providers: may offer lifetime mortgages, home reversion finance, or both.
- Equity release advisers: must be licensed under Part II of the LCF Law and meet qualification standards.
Indicative fees
- £1,415 for variation of existing LCF Law licence.
- 50% fee discount for new equity release providers during the first three years to encourage market growth.
One-off private arrangements
Individuals may apply for limited permissions to offer a one-off equity release agreement with an unrelated party. Advice from a licensed adviser remains mandatory in all such cases.
Looking ahead
The GFSC expects all licensed advisers and providers to be fully compliant by 1 January 2026. While changes to customary law are pending (to support the practicalities of lifetime mortgages), the regulatory framework will proceed regardless.
Advisers are encouraged to:
- begin preparations for licensing and qualification now
- familiarise themselves with the revised LCF Rules
- consider enhancing CPD around later-life planning, capacity, and vulnerability
