Guernsey plays an important role in global financial services as a centre with a symbiotic relationship with the City of London. We are a conduit for billions of pounds of international investment to enter the City’s capital markets, and the UK financial services industry receives significant revenues on the back of Guernsey’s work.
Our business model has changed over the years, adding increased diversification across the various sectors of industry to traditional wealth management and financial structures, such as captive insurance and trusts. It now encompasses 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).
Our attraction as a financial 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 specialist business environments that meet the needs of our clients and markets.
Guernsey has been on a journey since the global financial crisis, buffeted at times by the demands of supranational regulation and macro-economic forces. But we have endured – Guernsey has lived up to its reputation of being a rock of stability in the English Channel.
Security and stability are constant themes of ours and we continue to build on our core strengths, our global specialisms, in the investment funds, private wealth and insurance sectors.
We have always known that constitutional autonomy and political and economic stability create a strong and stable platform. It may have been an occasionally challenging decade for us in Guernsey, but events going much further back lend the island much of its stability and security – 800 years of constitutional autonomy represents a very special stability that we have, and that we guard jealously. Our status as a British Crown Dependency means that we are not, and have never been, part of the UK or the EU.
When, or if Brexit happens, the UK and the City of London will trade with the EU as a ‘third country’ – a route we have been walking for many years. We trade in specialist solutions to sophisticated clients, facilitating international capital flows and trade, which has enabled us to develop leadership positions in specialist services – such as listed private equity, captive insurance and family offices – through excellence and innovation.
Guernsey offers a range of specialist financial services for a sophisticated global client base. These include:
- Being a centre of excellence for the administration and management of alternative asset classes such as private equity investment funds.
- Guernsey insurers provide bespoke risk management, transfer and financing arrangements for institutional clients.
- Fiduciaries who specialise in bespoke structuring and long-term estate planning for high net-worth clients.
Agile and innovative
An island nation has to be agile to take advantage of opportunities as they emerge. Guernsey has a long-held reputation for innovation in financial services – introducing cell company legislation, and last year the world’s first regulated green investment product. As a recognised global leader in longevity risk transfer, our insurance sector is helping to fund the costs of increasing longevity to pensions funds and securing working people’s financial security in retirement, creating the effective funding of longer lives and reducing financial risks in traditional defined benefit company pension schemes.
A supportive and responsive government and regulatory regime
Guernsey’s autonomy enables it to respond quickly to the evolving regulatory landscape. The island regularly revises legislation and regulations to meet the needs of stakeholders and is often in the vanguard of supranational regulatory developments, such as when we pioneered the regulation of fiduciaries and trustees in 2001. Guernsey is widely respected for its quality of regulation and adherence to best practice. We are world leaders in international standards of anti-money laundering.
Diversification, breadth and depth of expertise naturally creates economic substance, and over the past 60 years, Guernsey has developed a multi-faceted financial services sector, covering wealth, investment and insurance management, and associated structuring.
The island has a deep pool of qualified professionals and providers of corporate and administration services, and strong partnerships between business and government, both on and off the island.
The substance in our business activities was recently recognised by the EU Council’s Code of Conduct Group on Business Taxation, as we satisfied the specific economic substance requirements for entities operating in or through the jurisdiction. As a result, Guernsey was reaffirmed as a cooperative jurisdiction in terms of good tax practice and transparency, one of few offshore finance centres to gain this accreditation.
A responsible global citizen
Guernsey has a long-standing commitment to being a good global citizen and playing a full role in initiatives focused on addressing international concerns such as harmful tax practices and money laundering, and in channelling capital to meet emerging demand in areas such as global warming and increasing human lifespans.
We were early adopters of the Common Reporting Standard and FATCA, the Foreign Account Tax Compliance Act. As part of the British financial services family, we believe we should, and we do, take every step to prevent harmful tax practices.
Green and sustainable finance
Guernsey Green Finance is driving developments in green and sustainable finance and is a member of the United Nations’ Financial Centres for Sustainability network. The development of green investment products is now a priority in our new financial services strategy. These funds are providing increasing investment flows to meet the trillions of dollars of investment in green and sustainable infrastructure necessary to meet agreed objectives to combat global warming.
Our insurance industry is a leader in the insurance-linked securities space, facilitating new capital to meet increasing risks of catastrophic weather events, helping to rebuild shattered communities after hurricanes, tsunami and earthquakes. They are also helping fund the costs of increasing longevity to pensions funds and securing working people’s financial security in retirement. Longevity risk transfers can secure effective funding of longer lives in traditional defined benefit company pension schemes.
We believe finance can facilitate an enhancement in the quality of humanity and we are determined to play a positive role.