Written by: Fiona Le Poidevin
Fiona Le Poidevin from Guernsey Finance
takes a look at how the island’s finance industry
is facing current challenges, and what it must
do to move forward successfully.
What is the current
state of the finance
industry in Guernsey?
industry is in great shape at present. Fund
assets under management and administration
reached £257.4bn by 31 December 2010,
up an unprecedented 40 per cent year on year.
Also, in a recent private equity survey, 61 per
cent of respondents favoured Guernsey as
their jurisdiction of choice for private equity
outsourcing. Guernsey banks are faring well
in the difficult current environment, and
although exchange rates and interest rates
have had an effect on the level of deposits
held, fiduciary deposits remain stable.
On the fiduciary side, the draft
Foundations law was released in April, and
consultation is under way. This means that
by early next year, Guernsey’s fiduciary sector
will add another string to its bow in the
form of Foundations, a concept that is better
understood in civil law jurisdictions. This
will make the island more appealing to those
that may have not used Guernsey in the past
to assist with private wealth management.
Also, the insurance sector has made clear
its position with regard to Solvency II (see
page 32), in that there are no current plans
to seek equivalence with the Directive on the
basis that it is not a good fit for the captive
industry, giving reassurance that it is ‘business
as usual’ in Guernsey, which remains Europe’s
leading captive domicile.
What do you see as the biggest threats
ahead, and how can they be overcome?
My belief is that the primary threats to
Guernsey centre around the increased
regulatory burden and uncertainty in the
current global environment – for example,
the AIFM Directive in Europe or the Dodd-
Frank Act in the US. I don’t believe that such
pressures will abate in the near future.
However, it’s often said that most
threats can be turned into opportunities, and
Guernsey demonstrates this in the way that it
faces such challenges head-on, and at an early
stage. The impact of such regulatory changes
is thoroughly investigated, working parties
are set up quickly and our industry bodies
and regulators continue to communicate with
the relevant global forums on a timely basis
to ensure that we have our say. Moreover we
concentrate on the positives and look for the
opportunities arising out of such situations.
Our robust yet pragmatic regulation allows
us to meet these international standards
whilst retaining flexibility, ensuring our
regulation is proportional to the risks we
are trying to overcome.
Name one strength of Guernsey’s finance
industry, and one weakness that needs
to be addressed.
I would say that one of Guernsey’s greatest
strengths is its adaptability. The last 50
years or so have provided many examples of
Guernsey’s great ability to cope with change.
In this fast-paced, dynamic world, the
willingness to cooperate and maintain
transparency when dealing with other
jurisdictions is now just as important as the
ability to innovate or to find new markets or
products to add to our offering. This is ever
more important in order to maintain, and
indeed enhance, our reputation and our
position on the world stage as a leading
international finance centre.
In particular, Guernsey has sought out
and developed niche markets within existing
sectors, and this, I believe, sets it apart from
many of its competitors. These factors are
what make the island a great place to do
business, and they help ensure Guernsey
has a bright future.
While the island’s finance industry tends
to be very forward-thinking as a whole, we
really can’t afford to be complacent about
our position. Events of recent years have
shown us that you can’t always predict what
is around the corner, so we can’t just sit on
our laurels and wait for good things to come
to us. I think we therefore need to ensure
that we don’t fall prey to inaction, and
must continue to be vigilant, innovative
and proactive at all times in maintaining
Guernsey’s position as an international
finance centre of choice.
Fiona Le Poidevin is Technical Director
and Deputy Chief Executive, Guernsey
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