08 Oct Conflicts of Interest and Governance in Guernsey: From Compliance to Culture
Conflicts of interest are inevitable in financial services. In Guernsey—a close-knit jurisdiction with overlapping roles and relationships—the challenge is not whether conflicts arise, but how effectively they are identified, managed, and disclosed. In 2025, the Guernsey Financial Services Commission (GFSC) completed thematic reviews of both fiduciary and investment licensees. The findings provide valuable lessons not only for compliance teams, but for boards seeking to strengthen governance and resilience.
The Governance Lens: GFSC’s Framework
The Finance Sector Code of Corporate Governance sets out eight guiding principles for boards. As the Code of Corporate Governance applies to all types of licensees, not just the Fiduciary and Investment sectors, it is important that all licensees consider the findings of the thematic reviews.
The Code of Corporate Governance contains three provisions which are directly relevant to conflicts management:
- Directors must act with independence and uphold fiduciary duties, even where commercial interests compete.
- Business Conduct and Ethics requires that firms identify conflicts at an early stage and handle conflicts (or potential conflicts) in a transparent manner. Firms should also build a culture where disclosure of conflict is normalized.
- Accountability. Firms should have clear reporting lines, robust registers, and evidence that conflicts are actively managed.
But the reality is that firms and individuals will find it difficult to be “Fit and Proper” under any of the Regulatory Laws if their identification and management of conflicts is inadequate. Conflicts, therefore, are not a side issue but a test of whether governance is functioning as intended as well as acting for the protection of clients, individuals and the firm.
What the Thematic Reviews Found
The GFSC surveyed 37 fiduciary and 33 investment licensees, covering about a quarter of each sector. The key messages were constructive: most firms are meeting minimum standards, but the GFSC have suggested that there is scope to further develop conflict frameworks.
Five recurring conflicts of interest categories emerged from the GFSC’s findings:
1. Role and duty conflicts (e.g., trustee also serving as company director)
2. Incentive conflicts (e.g., gifts, retrocessions, personal interests)
3. Relational conflicts (e.g., family or personal ties affecting judgement)
4. Client-related conflicts (e.g., favouring one client’s interests over another’s)
5. Structural & governance conflicts (e.g., pressures from ownership or business model)
Across the sectors, the GFSC saw strong foundations—registers were widely used, policies proportionate, and training embedded. But found that several weaknesses stood out:
– Over-focus on board conflicts while missing operational-level risks.
– Registers recording conflicts without documenting mitigation steps.
– Variable board oversight and management information.
– Weak disclosure discipline, treating it as a last resort instead of a core control.
The weaknesses identified would not be a surprise to the GFSC. There is a long history of licensees being sanctioned for failing to identify and manage conflicts of interest.
When It All Goes Wrong: Enforcement Insights on Conflicts of Interest
There have been several Public Statements issued by the GFSC going back more than a decade which criticize the identification and management of conflicts of interest. These are not limited to the Fiduciary and Investment sectors. The most recent cases on conflicts are considered below.
These cases reinforce that governance failures are not abstract risks—they result in fines and public statements for both the firm and directors as well as potential prohibitions.
In Channel Island Finance Limited, Mr Carré and Mr Cook, the firm was licensed as a credit business, providing lending to retail and commercial customers as well as loan broking services. A significant issue which gave rise to the sanctions imposed on the firm and its directors was the failure to identify and manage conflicts. The circumstances were that Client A lent money to the firm on the basis that the firm would lend those funds to third parties (where the loans were under £2,000) and broker any larger loans for the client. Unfortunately, the firm paid out a large proportion of these funds to Mr Carré or lent the funds to companies owned by Mr Carré.
The directors were unable to explain how Mr Carré’s conflicts were managed in relation to the lending of the funds to his companies. Additionally, there was a lack of documentation surrounding the loan approvals as well as general lack of controls including Mr Carré being the sole signature on the firm’s bank accounts.
Failing to manage conflicts of interest was one of several issues which Fides Corporate Services Limited, Mr Conway, and Mr Turner were sanctioned for in 2024. The adverse findings arose due to the firm, Mr Conway, Mr Turner and several staff members accepting shares from a client as a reward for services with a purported value of over USD630 million. While the shares may be considered generous in the very least, the UBO of the client had the ability to unilateral remove these shares at any time. The GFSC found that this gave the UBO the ability to exercise control over the firm and that while there was a conflicts’ register, the board of the firm failed to maintain an effective conflicts of interest policy.
Crescendo Advisors International Limited and Mr Hamilton were sanctioned in 2022 for, in addition to other things, failing to avoid, manage or minimize conflicts of interest. These failings arose from the management of the investments of a client, Ms A, by her ex-husband. In addition, Ms A’s ex-husband was a relationship manager at the group office as well as a director of the Licensee at the time the business relationship was established. The firm not only relied on information provided by the ex-husband, without independently verifying what it was told, but continued to act on instructions from the ex-husband regarding Ms A’s account after he had resigned as director.
The Firm failed to recognise and address the conflicts of interest which arose between the underlying client and the director of the Licensee (who was also a relationship manager in the group office and Ms A’s ex-husband). This conflict was not properly documented or managed and the Director was permitted to make decisions on the client account and was relied upon for information, both at take on of the client and during reviews.
Sector-Specific Lessons
For Fiduciaries, while the trustee–director tension remains the classic conflict within the industry, this can be mitigated. The GFSC suggests that high-performing firms use abstentions, independent directors, and precise minute-taking to document how duties and conflicts are balanced.
In contrast, Investment licensee firms should remain cognizant of conflicts arising where staff sit on client fund boards. Best practice to deal with these types of conflicts includes abstention from remuneration discussions, bolstered independence on boards, and strong controls on personal account dealing.
A Practical Blueprint for Boards
Drawing from both the thematic reviews and the governance code, boards should focus on:
1. Mapping conflicts holistically including the GFSC’s five categories.
2. Embedding conflicts of interest triggers in workflows across onboarding, approvals, trading and periodic reviews.
3. Raising the standard of registers so each entry captures description, risk, mitigants, disclosure, and follow-ups.
4. Strengthening management information provided to the board with trends, closure times, repeat issues, and CMP outcomes.
5. Elevating disclosure as a control, training staff to explain residual risks and capture client acknowledgement.
6. Engineering independence using NEDs, protectors, or alternates where structural conflicts are unavoidable.
The Cultural Imperative
Policies and registers only work in a culture where people feel safe declaring conflicts and leaders model transparency. The GFSC’s reviews highlight that perception matters as much as reality: if a reasonable outsider might see a conflict, it must be disclosed and mitigated.
For Guernsey boards, this is where governance becomes strategic. Firms that embed conflict management into culture, not just compliance, will build trust, make better decisions, and stand out in a competitive market.
How can ConsultGC assist?
In navigating these challenges, firms need more than policies—they need experienced guidance to embed proportionate, workable solutions. ConsultGC, a dedicated regulatory consultant, supports Guernsey boards and senior managers by reviewing conflicts of interest frameworks against GFSC expectations and past learnings from Public Statements, stress-testing registers and governance reporting, and training directors and staff on judgement-based decision-making. By combining technical expertise with practical insight from local enforcement outcomes, ConsultGC helps firms not only meet regulatory standards but also strengthen their governance culture—turning compliance into a strategic advantage.