Guernsey: The Big Dull Grey One And The Tsunami

Last Updated: 25 June 2012
Article by Andrew Munro

Most Read Contributor in Guernsey, November 2017

Originally published in HFM Week, Guernsey Special Report, May 2012

Andrew Munro of Ogier Fund Services explains how the fund administrator's role is evolving to meet the international legislation facing the industry.

The big dull grey one

When I first came across investment funds, it was in the context of infrastructure funds, and the young me was struck by what an exciting business surrounded us in everything dull, grey and quotidian. Nothing glamorous, but essential to the proper functioning of the world as we know it. I had never really thought about the glass of water on my desk in that way until that point in my life. An invisible world opened up to me.

We all know that dog owners come to look like their dogs (or is it the other way round?) over time. In the same way, it has struck me recently that some fund administrators are starting to look like their clients. Or certainly, that's how it feels to me sitting in Ogier Fund Services in Guernsey.

Please please dear clients, don't think for one moment that we think of you as canine friends or even affectionate pets for that matter. We are taking everything that is dull and grey and quotidian in relation to the operation of collective investment schemes into our camp.

If you think about Ogier Fund Services undertaking all the routine back-office work in relation to an infrastructure fund investing in dull grey water pipes, there is something beautifully poetic in taking that which is dull and grey and invisible overlying something that is itself dull, grey and invisible, and turning it into something exciting. But in a very nerdy way, what may for a fund manager be dull greyness around a fund's daily functioning is truly exciting work for us. It also means busy fund managers can get on with the real business of running their funds.

What a tragedy it is for investment managers having to tie up their fundraising and investing expertise in the daily grind. And these days the daily grind could easily fill a manager's day, leaving no time to get on with the substantive business of the fund.

In years gone by when a jurisdiction was chosen because, for example, of its international tax neutrality, managers may have placed limited demands on their local administrators. Simple registered office, some company secretarial capability, simple provision of payment processing and provision of board membership may have been the order of the day.

But the demands of the modern industry have meant that local fund administration businesses have expanded their operations to meet the ever increasing demands and complexity of the commercial and regulatory landscape. Compliance and anti-money laundering services are now a mandatory part of the package on offer from local administration businesses.

A trawl through the services typically commissioned by our clients shows that the scope of day to day functions being bought by clients is increasing and there is no reason to expect the trend to stop any time soon. The current list of services also includes some non-traditional areas such as treasury services, which incidentally can help to significantly offset the overall administration costs of a fund, meaning that a manager is gearing full administration services at what is in effect a significantly discounted rate.

The modern fund administrator is expected to be, among many other functions, part lawyer, part accountant, part regulatory and compliance expert, part commercial manager, part systems expert and part customer services function. It is a daunting list of demands.

In response, Ogier Fund Services finds it is increasingly recruiting not just qualified accountants who have for many years formed the backbone of senior ranks of administrators, but also lawyers with relevant experience, as well as spending exponentially expanding amounts of time and money on training, internally and externally, stand at all levels. It is a standard expectation that Ogier Funds Services staff are professionally qualified or studying towards a professional qualification of one sort or another.

The tsunami

I was reading an article on the Ogier intranet recently by one of our colleagues in our Tokyo office about how things were in Japan one year after the tsunami. It struck me that our industry is currently facing a veritable tsunami of significant new legislation with international dimensions.

I hardly need to remind the readership of the UK's new Bribery Act, which came into force last year, the imminence of the effects of FATCA and Dodd Frank, the slow burning AIFMD, not to mention the new code of corporate governance, which we have had since January 2012 in Guernsey.

Indeed, one of our compliance officers induced a cold sweat moment in me recently when he returned from a conference and presented me with a comprehensive list of some fifty pieces of new legislation proposed in various parts of the world in some guise or other, which will or could impact our operations.

Fortunately, with a presence in 10 centres around the world, our recent decision to open for both legal and fiduciary services in Luxembourg during 2012 and our exponential growth in Asia, Ogier is well versed in the truly international.

But it was considering FATCA, which brought the expansion of scope of services into sharp relief for me. Ogier is currently devoting considerable resources to analyse the impact of FATCA for its business and that of its clients. Ogier is also looking at its systems and procedures with a view to implementing any changes which may be needed in good time.

The company is planning to enter into a FATCA agreement with the IRS before the 30 June 2013 deadline. In the context of Ogier Fund Services, the considerable investment made in systems, for example in working with SunGard Investran to bespoke the platform for Ogier, will pay significant dividends as reporting and data analysis requirements increase. It will also make it easier to respond to future FATCA type legislative requirements.

I would predict that the tsunami of international legislation will precipitate consolidation within the fund administration industry with those entities that have not made the investment in systems and processes to enable them to cope with the increasingly complex requirements falling by the wayside.

Writing an article on new companies' legislation in Guernsey a few years ago, I quoted Jon Kabat-Zinn "you can't stop the waves, but you can learn to surf". How appropriate those words are again here and now as we face the legislative tsunami. However, I would now add a closing thought that there is another option: you can learn to surf or you can get someone else to learn to surf for you. A friendly fund administrator near you will be learning to surf the tsunami so that you don't have to.

Andrew Munrois a director with Ogier Fund Services in Guernsey.He currently heads theinvestment funds team in Guernsey, which servicesa range of closed-endedprivate equity andinfrastructure funds. Prior tojoining Ogier Fund Services,he was an advocate andmanaging associate withOgier's Guernsey legalpractice, where he practisedfrom June 2004 gaining wideexperience of Guernseyfunds and complexcorporate and commercial transactions.

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.

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