Guernsey: Years Of Progress – Incubation Of Managed Services In Guernsey

Last Updated: 10 June 2013
Article by Michael Betley

Most Read Contributor in Guernsey, September 2018

Michael Betley, managing director of Trust Corporation in Guernsey, considers the reasons for the growth of incubation of managed services in Guernsey.

ONE WAYGuernsey is developing high-value new business is through fiduciaries incubating family offices, boutique investment firms and private equity managers that can tap into existing expertise and infrastructure. This is of particular value to family offices or businesses taking an initial look at Guernsey before becoming fully established in the jurisdiction.

The likes of Terra Firma and BlueCrest are prime examples of the transitioning of a business into Guernsey before establishing a full-blown presence on the island. Why is this is a growing trend? What structures are used to facilitate the arrangement? And what are the benefits to the incoming organisation of working alongside an established fiduciary?

Developments in managed services

While in the past, incubation or managed services were reserved for professional firms and international corporates, the current trend attracts privately owned businesses and family offices that are coaxed to the island's business environment, which provides easy access to the London and European markets and same-day trading with Asia and North America. For many, London has provided a lifestyle of choice, coupled with unrivalled access to investment markets, but recent changes to the once-sympathetic tax regime have unsettled many UK-resident non-domiciliaries. This, together with increased financial regulation, has prompted people to look elsewhere to provide a home for both business and family and, as a consequence, Guernsey has become a preferred jurisdiction for those looking to establish a tax and business-efficient hub on Europe's doorstep.

Historically, Guernsey attracted many finnancial and banking institutions that did not necessarily wish to tie up significant capital in investing in the full cost of a standalone operation; as an alternative they entered incubation or managed contracts with established local institutions. The managed bank had its heyday in the 1980s and 1990s, well before the significant increase in capital adequacy rules. This enabled the local regulated business, or host, to provide all of the infrastructure and regulatory compliance needed.

Fiduciaries then followed, with a proliferation of foreign-owned managed trust companies in Guernsey. With the advent of the protected cell company in Guernsey, the insurance market was then also able to offer its own managed services through the new 'rent a cell' being offered principally to captive insurance companies. Next followed the investment firms and, more recently, the private equity houses.

The latest development of managed services has been the arrival of niche investment firms and family offices, which are easily able to plug into the island's financial infrastructure.

Why Guernsey?

Internationally, there have been dramatic changes in Western economies, turbulence in the financial sectors and political unrest in many parts of the world, in particular the Middle East and North Africa, against a background of a slow but continued shift of economic power from West to East and North to South. The Eurozone debt crisis may be less headline-grabbing, but the underlying themes are still there. The speed of change has never been so fast, nor has our need to react been so acute. Private family wealth and the discreet wealth-management houses are looking to position themselves in quieter, more secure locations, and Guernsey is seen as such a safe haven. The qualities that have historically attracted business to Guernsey (such as integrity, stability, tax neutrality, robust regulation and a common law framework) are to be found elsewhere too, but what sets Guernsey apart from its Caribbean and Asian competitors are the administrative skills that have developed, which work hand in hand with the often complex fiduciary decision-making ability and sound corporate governance principles.

It is the experience in operating businesses, as well as the investment and fiduciary skillset that is key to the longer-term aims of the new and more entrepreneurial wealth of today. With greater scrutiny being placed on international finance centres (IFCs) and those that use them and operate from them, it has become increasingly important to demonstrate the substance of those operations and show that real decision-making is taking place in the chosen jurisdiction. Those running investment and fiduciary structures will need to demonstrate more clearly that they have the expertise and the ability to make informed decisions rather than simply rubber-stamp them. Having a real presence (managed or actual) in the chosen jurisdiction is becoming more critical.

New wealth

The concentration and size of personal wealth has never been as great, and the affairs of the wealthy have never been more complex. The historic structured wealth of the entrepreneur and landed estates of UK and continental Europe are already generally settled. It is the wealth principally coming from the new European economies

and the Middle East that is dominating the establishment of private family and investment offices, either for the first time or separating out functions and locating each in the preferred location. With more aggressive tax and regulatory impositions in mainland UK and Europe, many active private investment offices are shifting their activities to jurisdictions with easy access, benign tax systems and regulation. This is also true for more sophisticated private equity houses. While many known names have established their own offices locally, typically the process is gradual.

Usually the first step is to establish a 'managed' presence with a local service provider, which offers all the usual office infrastructure, staff and regulatory resources needed. Ultimately, many firms and private offices wish to establish a greater presence by having dedicated allocated offices, meeting rooms, servers and staff, and so require a jurisdiction that offers them the ability to easily shift from a managed presence to a physical one.

Creating opportunities

This opportunity has not been created by any one particular factor. On the investment side, Britain is home to 70 per cent of Europe's hedge funds and is a major centre for family offices and their investment teams. The cost and bureaucracy of greater regulation, such as the Alternative Investment Fund Managers Directive, is driving these businesses to look elsewhere. Individual and corporate taxes are also increasing and as a consequence many are considering strategic options, in particular how to gain access to Europe without actually being there. Guernsey offers such a facility and can give businesses a passport into other markets.

Many wealthy families have historically used private banks to assist them in managing their wider investments, structuring and management of day-to-day affairs. There has, however, been an increasing trend to uncouple the single relationship with one institution, in particular for families that self-invest or have more sophisticated investment needs. These families are looking for solutions that are more specific to their needs, which often lead to the propagation of their own private offices. Guernsey is host to an increasing number of single-family offices, either managed within existing fiduciary service providers or those that have fully incubated and now manage themselves.


While the traditional qualities that Guernsey offers still hold true, there are some more subtle changes that are influencing both IFCs and investors. Professional businesses and wealthy families generally accept that appropriate regulation is needed. However, it should not be overly restrictive, which is increasingly becoming the case in the main markets and in most onshore jurisdictions. Guernsey's regulatory system is highly regarded and the island has received exemplary independent evaluations from the IMF.


Then there is the question of taxation. More than ever before, governments are looking at ways to increase tax revenues, and they are becoming more intrusive in the process. Guernsey's zero/ten tax regime (zero tax for all foreign corporates, 10 per cent tax for domestic corporates of a particular category) offers an attractive tax environment in which investors and families alike can base their worldwide asset-base, without the added drag of domestic tax.


In addition to the need to find the right business and tax environment, there has been a shift in attitudes towards secrecy and reputation. Confidentiality is vital to all private and business matters, and is a cornerstone of Guernsey's financial services industry. Transparency in financial markets and cross-border transactions is today's reality. Guernsey's court system and rule of law are robust and well-tested, and offer significant comfort to those who seek legitimate privacy. Reputation is increasingly important for families with international interests, and being associated with a reputable jurisdiction comes with a certain cachet.

Welcome change

Guernsey's fiduciary market is changing. No longer is it just the destination of choice for international trustee companies, but wealthy families and entrepreneurs are also looking to create a more substantial presence on the island. This in itself should create opportunities for the future and sustain the needs of the new breed of the super-wealthy.

Originally published in STEP Journal, April 2013

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
Related Topics
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