Guernsey Finance

A Message from Lord Pickles and Lord Blunkett, followed by Guernsey Finance's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Guernsey Finance is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett
Pickles signature Rt Hon The Lord Eric Pickles

Highlighting best practice
Dominic Wheatley, chief
executive of Guernsey Finance
Guernsey’s financial services industry, the engine of the island’s
economic growth over the past half-century, values its
relationship with the City of London and position within the
British finance industry. This sector – which has four main pillars of
investment funds (70 fund managers and administrators based in the
island), some 150 wealth managers, 20 insurance managers and 20
banking groups together with a range of support service providers
– employs about a third of the island’s workforce. Guernsey
Finance is the promotional agency for the industry.
The finance industry’s importance in Guernsey
Guernsey has a clear role as a conduit through which billions of pounds of
international investment enters the City’s capital markets, and the UK financial
services industry receives significant revenues on the back of Guernsey’s finance
sector – more than £1 billion from investment management fees alone.
Some £35 billion from Guernsey investment funds is invested into UK assets, most
into long-term tangible assets, including schools, hospitals, airports and roads – and
the majority of that money comes from investors outside the EU, demonstrating the
island’s role as a facilitator of inward investment into the UK.
Our alternative investment industry also provides complementary options to the
trustees and investment managers looking after UK pension funds providing greater
financial security and improved returns that are helping secure the financial futures
of workers in the UK and elsewhere – something of increasing importance to us all as
we live longer. Tens of thousands of UK jobs are created and sustained by our private
equity funds supporting business start-ups, development and turnaround.
Our business model has changed over the years, adding increased diversification
across the various sectors of our industry to traditional wealth management and
financial structures such as captive insurance and trusts. It now encompasses both
the facilitation of international money flows and the provision of specialist regulatory
environments designed for low volume niche products such as insurance linked
securities (ILS) and the associated complex bespoke administration requirements.
Our capacity for innovation adds significantly to London’s position as a global finance
centre with products such as collateralised ILS, and the protected cell companies on
which they are based, being reproduced into the equivalent UK regime just last year.
For 20 years, Guernsey has been at the forefront of meeting evolving global regulatory
standards, including pioneering the regulation of fiduciary managers in 2003. We are
a fully contributing partner of the global financial services network and have played
a key role in developing international regulatory standards, not only in private wealth
management but also in insurance as founder members of the International Association
of Insurance Supervisors (whose core principles underpin the EU’s Solvency II regime).
»Chief executive: Dominic Wheatley
»Guernsey has had a financial
services industry since the mid-
1960s, when merchant banks
set up offshore offices in the
island. Guernsey Finance, the
promotional agency for the
island’s finance industry, was
established in 1999
»Guernsey Finance has a presence
in Shanghai, Hong Kong and
London, and the island is
developing business flows globally,
particularly with the United States,
Asia, Africa and Europe
»Guernsey is Europe’s leading
jurisdiction for captive insurance,
and an emerging centre for
collateralised reinsurance business
»There are more than 1,000
investment funds domiciled or
serviced in Guernsey, valued at
some £260 billion. Guernsey
funds facilitate substantial
investment into and from the
UK and Europe
»Guernsey is home to more non-
UK entities listing on the London
Stock Exchange than any other
Guernsey Finance
Our attractiveness as a finance centre
lies not in our tax-neutral environment
– which ensures that those undertaking
business (private or corporate) must fulfil
their proper tax obligations wherever they
are themselves taxed – but in our ability to
create niche business environments that
meet the needs of our clients and markets.
Excellence and ethics
As part of the British financial services
family, we believe we should take every
possible step to prevent harmful tax
practices. We also operate the most
stringent anti-money laundering regime
in the world.
At the height of recent constitutional
concern within the islands over the UK’s
Sanctions and Anti-Money Laundering
Bill over public registers of beneficial
ownership, our chief minister, Gavin
St Pier, robustly defended the island’s
constitutional relationship and the island’s
role in the international finance system:
“Our standards and record are exemplary,
and we can hold our head high in any
international forum on the topic… There
is much that other jurisdictions could learn
from us. We have no intention of being
passive or defensive. On the contrary,
we will be proactive and proud when it
is appropriate to be so.”
The City’s view of us is very different
from that sometimes (mis)represented in
the media. They rightly see us as a leader
in international standards of AML. Every
time we are assessed, we are found
to be in the vanguard of international
jurisdictions. Our symbiotic relationship
with London sees the City benefit from
having the islands available as part of its
suite of offerings as we maintain quality
standards that London is known for.
That reputation extends to global financial
markets in which we are universally
respected for the quality of our regulation,
our adherence to best practice in
transparency and AML, and the excellence
of our financial service practitioners.
An example of this is our Register of
Beneficial Ownership which records
and maintains verified details of the
ultimate beneficial owners of all assets
owned through Guernsey structures.
The information is available to criminal
investigators and tax authorities in a
timely manner, meeting international
standards as agreed by the G20.
Guernsey is not a secrecy jurisdiction,
but we do recognise and respect
the legitimate right of individuals to
personal privacy. There is more than a
marginal difference between legitimate
and reasonable privacy from the prying
eyes of the merely curious and the
rights of legitimate public authorities
charged with the collection of taxes,
protection of citizens and the general
management of the property within
their governance.
Our complementary offer to the City
of London is currently under a degree
of pressure as the Brexit negotiations
continue. Our government, the States
of Guernsey, remains positive about the
future and is working though the issues
with the UK government, with strong
engagement at political and staff level.
Regarding financial services much
remains to be understood in terms of
our future partnership, including how
the EU will deal with market access and
regulatory matters, such as recognition
and divergence. However, we are
seeing this process as an opportunity
to reaffirm the positive contribution we
make to the UK economy.
We believe that our well-established
third country provisions serve to illustrate
to the UK how financial services can be
successfully traded into the EU as a third
country, and that Guernsey can be seen
as an oasis of stability amid uncertainty
that can provide a conduit between the
UK and the EU in the future.
The substance in our business
environment offers clients the high
degree of stability, reliability and
certainty they seek, in a jurisdiction that
is in tune with the future direction of
the global financial services industry.
Guernsey has shared values with
the UK. Just as we shared in the
celebrations for the royal wedding, we
want to be strong partners in Britain’s
economic future and continue to be a
part of its financial services family. We
believe we are well placed to do so.
Our standards
and record are
exemplary, and
we can hold our
head high in
forum on the
Guernsey (national
flag on the left)
sees itself as part of
the British financial
services family

This article was sponsored by Guernsey Finance. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from Rt Hon Kwasi Kwarteng.

Rt Hon Kwasi Kwarteng's Foreword For The Parliamentary Review

By Rt Hon Kwasi Kwarteng

This year’s Parliamentary Review reflects on a tumultuous and extraordinary year, globally and nationally. As well as being an MP, I am a keen student of history, and I am conscious that 2020 would mark the end of an era. It will be remembered as the year in which we concluded Brexit negotiations and finally left the European Union. Above all, it will be remembered as the year of Covid-19.

In our fight against the pandemic, I am delighted that our vaccination programme is beginning to turn the tide – and I pay tribute to the British businesses, scientists and all those who have helped us to achieve this. But the virus has dealt enormous damage, and we now have a duty to rebuild our economy.

We must ensure that businesses are protected. We have made more than £350 billion available to that end, with grants, business rates relief and our furlough scheme supporting more than 11 million people and jobs in every corner of the country, maintaining livelihoods while easing the pressure on employers. The next step is to work with business to build back better and greener, putting the net zero carbon challenge at the heart of our recovery. This is a complex undertaking, but one which I hope will be recognised as a once in a lifetime opportunity.

Through the prime minister’s ten point plan for a green industrial revolution, we can level up every region of the UK, supporting 250,000 green jobs while we accelerate our progress towards net zero carbon emissions.

With our commitment to raise R&D spending to 2.4% of GDP and the creation of the Advanced Research & Invention Agency, we are empowering our fantastic researchers to take on groundbreaking research, delivering funding with flexibility and speed. With this approach, innovators will be able to work with our traditional industrial heartlands to explore new technologies, and design and manufacture the products on which the future will be built – ready for export around the globe.

And I believe trade will flourish. We are a leading nation in the fight against climate change. As the host of COP26 this year, we have an incredible opportunity to market our low-carbon products and expertise. Our departure from the EU gives us the chance to be a champion of truly global free trade; we have already signed trade deals with more than 60 countries around the world.

As we turn the page and leave 2020 behind, I am excited about the new chapter which Britain is now writing for itself, and for the opportunities which lie ahead of us.
Rt Hon Kwasi Kwarteng
Secretary of State for Business, Energy and Industrial Strategy