Guernsey: Guernsey’s Funds Industry Hits Take Off

Last Updated: 21 April 2011
Most Read Contributor in Guernsey, November 2018

Article by Stephanie Baxter

Originally published in Fundamentals Magazine, Spring 2011

Stephanie Baxter, Correspondent for Fundamentals Magazine, took a trip to Guernsey to find out what makes the island's financial services industry tick.

Guernsey might appear to be a small fry in the ocean, but it might surprise many to discover that – unlike its larger counterparts - Guernsey has not only had a pretty smooth ride through the financial crisis but has also managed to break a few records in the process.

Its greatest achievements this year include receiving recognition from the International Monetary Fund (IMF) for its "high standard" regulatory infrastructure. Guernsey has long been viewed as a holiday destination with its close proximity to France and the UK, but the island's main income is generated from its financial services sector rather than tourism.

The island's finance industry contributes around 40% to the Crown dependency's total GDP, which could easily have led to its downfall during the economic crisis. But despite a 4.5% decline in the economy during 2008 the island is currently in a stronger position than other jurisdictions, with no public deficit and a well-supported state pension scheme.

Yet it is Guernsey's investment funds industry that has really taken off recently by moving past the £250bn mark at the end of December 2010 with a phenomenal growth rate of 40% over just one year.

Guernsey's focus on niche products has helped it to ride out the storm, says Jarrod Cowley- Grimmond, director of finance sector development for the States of Guernsey. Like most offshore jurisdictions, Guernsey has specialised in certain products to differentiate itself from the rest of the market. Over the past two decades the island has experienced a gradual shift from retail or equity-traded schemes to predominantly institutional niche funds.

While the Cayman Islands have concentrated on hedge funds, Guernsey has become well-known for its private equity funds, fund of hedge funds and closed-end listed funds. Investors are looking for those alternative funds now more than ever as well-regulated and secure products are set to become the future.

Paul Everitt, who is managing director at Fund Corporation of the Channel Islands, says that Guernsey will benefit from diversifying itself. Fund Corporation, which was established in 2007, services clients with private equity, real estate and fund of hedge funds, but is getting demand in new areas. "We have clients who are looking to launch in many new areas: start-up hedge funds, real estate derivatives and more IFA-focused fund offerings," Everitt adds.

This need to diversify is more important now than ever as emerging fund domiciles such as Malta and Cyprus creep into the picture, citing concern that Guernsey and other well-established centres could lose out to the rising competition. Yet according to Mark Douglas, managing director at Mercator Fund Services Limited Guernsey: "Malta and Cyprus have tried to be new entrants, but we've got the history, the positive IMF reports and regulation that's developed over time."

Another potential threat to fund domiciles is the EU's Alternative Investment Fund Managers (AIFM) Directive which came under considerable scrutiny in 2010 for its potential threat to the alternative funds industry.

Despite the global uncertainty over the Directive, Guernsey's fund sector seems to have a pretty relaxed attitude to the new regulations. "Business as usual" is the phrase on everyone's lips. According to Neale Jehan, chairman of the technical committee of the Guernsey Investment Funds Association (GIFA), Guernsey will be in a better position than its European counterparts because the island is not part of the EU, unlike Malta for example. "If you're not sitting in the EU then you're still open to non-EU investors without having the additional cost of the Directive, which means that your products will be more flexible," he says.

Although Guernsey does not have EU membership, the doubt over the directive has given the island an opportunity to go into Brussels to have some input in the formation of the new fund passport rules.

Guernsey is very proud of its strong regulatory network, but it has somewhat struggled to bring that message across in previous years. "The IMF visit and its subsequent positive report were catalysts for promoting Guernsey as a well regulated jurisdiction," says Lyndon Trott, Guernsey's chief minister. The island's finance industry now hopes that this will encourage other funds to migrate or outsource their administration office to Guernsey.

The island's fund managers, law firms and ministers talk about selling Guernsey as an 'entire package' when bringing in investors and funds. Not content with simply promoting the offshore centre as a 'tax neutral' destination, Guernsey's lawyers and fund managers bring in other factors such as its close relationship with London, relaxed lifestyle, beautiful landscape and zero public debt. But while a jurisdiction's fiscal stability and picturesque views might be important to some investors, there will be other more pressing factors such as low tax rates, expertise, and a well-balanced regulatory infrastructure.

There is also the question as to governments' future approach to so-called offshore tax havens, which have come under fire from governments' desperate attempts to draw in extra money in the face of huge public deficit. Guernsey has been caught up in this and is obviously keen to lose the title. Despite public furore in the UK over businesses relocating to offshore destinations to avoid paying tax, it is interesting to note that Guernsey's fund industry actually provides a net benefit to the UK. What's more, around 50% of investment from Guernsey-domiciled funds goes back into the EU, which is surely something that everyone would welcome, says Cowley-Grimmond.

A recent report by the OECD has helped to put Guernsey in a more favourable light by confirming that it has abided by OECD rules on transparency and information exchange for tax purposes. The island has taken this further in the first quarter of 2011 by signing these bilateral tax agreements with Canada, Romania and South Africa.

It is misleading to use the expression tax haven to describe Guernsey, says Andrew Walters, partner at Mourant Ozannes. He goes on to say that the island is now recognised internationally as a transparent and cooperative offshore financial centre and that the island has gone to great efforts to educate the outside world of this and to distinguish itself from other less cooperative jurisdictions. He says that these efforts have received a boost with the launch of a Channel Islands office in Brussels to give Guernsey and Jersey greater presence at the heart of Europe, headed by the current British ambassador to Bulgaria, Steve Williams, who starts his new job in April.

This major development was undoubtedly aided by Guernsey's presence in Brussels during the development of the Directive. The move to create a joint office is highly surprising considering the historically competitive tensions between the two islands. Jersey and Guernsey have not always seen eye-to-eye when it comes to regulation and tax rules, but the Directive appears to have brought the two closer together.

"The regulators don't always work together as much as they perhaps should," say Paul Wilkes and Jason Romer who are both partners at Guernsey law firm Collas Crill. However, Romer claims that while it is important for the two islands to co-operate where they can, the competition between them is also a vital element to driving new business. "Jersey and Guernsey are like twin brothers, pushing each other to innovate and do the best they can."

Guernsey has generally been regarded as the 'little brother' of the two in terms of its financial industry, but the Bailiwick has surpassed Jersey this year both in terms of the number of companies listed on the London Stock Exchange and its domiciled funds.

"Guernsey will continue to promote itself as a well-regulated international financial centre that complements onshore jurisdictions by providing a niche set of products and services to a global client base," says Peter Niven, chief executive of Guernsey Finance, which promotes the island's financial industry. Despite the IMF and OECD reports, Niven claims that Guernsey still has some way to go to overcome ingrained misconceptions and convince its detractors that it is a well-regulated international finance centre.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions