Guernsey: Guernsey’s Funds Industry Hits Take Off

Last Updated: 21 April 2011
Most Read Contributor in Guernsey, October 2017

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.

In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.