Guernsey: The Future For The Investment Business Sector In Guernsey

Last Updated: 18 April 2007
Article by Paul Christopher


In early 2005 a committee reviewing the investment sector of the finance industry in Guernsey (one of several review committees) was established with Advocate Peter Harwood as Chairman. Importantly, Peter Moffatt, the Director of the Investment Business Division of the Guernsey Financial Services Commission ("the Commission") was also appointed to the Committee. This recognised that industry and the regulator would need to cooperate and understand each other to create the appropriate environment for a modern off-shore centre.

The terms of reference for the Committee were "to consider the investment industry in the Bailiwick of Guernsey and the conditions required for its continued prosperity." The review would consider the legal and regulatory framework, as well as aspects of public policy relating to the industry.


The Committee produced a report in March 2006. The report recognised that there were two sub-sectors of the investment business sector in Guernsey:

  1. The fund-specific sector, e.g. investment funds, and related fund-specific services such as custodians, fund managers and administrators (by far the larger sector); and
  2. Non fund-specific sector, e.g. traditional investment advisers/stockbrokers, discretionary investment managers, execution-only broking activity, boutique investment houses and wealth management.

Perhaps the most important matter dealt with was the issue of time taken in the licensing and regulatory approval processes in the fund sector. The report suggested that the regulatory approach be altered so that regulation be concentrated less on the regulation of individual investment funds, with more attention given to the regulation of those licensees who provide services to investment funds.

To this end there were detailed proposals to:

  1. repeal the "Control of Borrowing" ordinances and replace them with a generic "Prospectus" law, applicable to all Guernsey entities, setting out minimum disclosure criteria for Offering Documents;
  2. take the funds’ provisions from the existing Protection of Investors Law and modify them to become a generic Funds Law applying to both the open and closed-ended sectors;
  3. establish two categories of fund – Regulated and Registered – and to remove the current requirement for Principal Managers. All funds, whether Regulated or Registered, would have to appoint a locally licensed administrator. Registered fund prospectuses would have to make it clear that the fund was not regulated by the Commission; and
  4. allow Guernsey service providers to offer services to non-Guernsey vehicles, subject only to a notification requirement to the Commission.

The report reached a further number of significant conclusions. In particular, the report found that the fund-specific sector had been responsible for creating and sustaining a significant volume of employment in the Island and contributing to the profile of the Island in the international investment community. Consequently, it was understood that it was important to encourage and sustain the fund-specific sector.

The report clearly recognised the possibility of an "overheating" economy and noted that there needed to be a careful balance between the amount of administration to be undertaken in Guernsey and the level of administration that was permitted to be outsourced. One key difference between the proposed Guernsey model and the model used in, for example, the Cayman Islands is that a Guernsey licensed entity must retain responsibility for the conduct of the administration of each Guernsey fund. The Cayman Islands’ model, which, if adopted, would have allowed greater administration of Guernsey-domiciled funds to be undertaken outside the Island, was expressly rejected because of the impact that would have on:

  1. the economic benefit retained within Guernsey;
  2. the continued sustainability of Guernsey as an administration centre; and
  3. the reputation of the Island where Guernsey-domiciled funds were administered by persons over whom the Commission had no authority.

The good news is that moves are already taking place to change regulatory policy to allow for these changes. In February 2007 the registered fund regime in respect of closed ended funds was implemented and the policy requirement for there to be a principal manager incorporated and licensed in Guernsey for open ended funds was reversed.

The report was keen to encourage growth within both fund-specific and non fund-specific sectors. In particular, the report considered it was important that the Island attracted intellectual capital to move to the Island and to establish ownership within the Island.


Even before the implementation of the report, the influx of new funds to the Island (chiefly hedge funds, private equity and property funds as well as traditional vehicles) is substantial, not only a reflection of global markets but also the new-found confidence the sector has as a result of the Harwood proposals. For instance in 2006 values of funds under administration and management increased to £130.2 billion (an increase of 30.2% in the year). There is also a new trend in the establishment of businesses such as asset managers, stock brokers and private wealth managers, driven by various factors. Again, the significance of the regained sense of purpose the investment sector now has should not be underestimated.

The streamlining of the authorisation and licensing processes for the investment business sector will produce faster responses and enable the industry to react more quickly to the pace of the global commercial environment. The focus of attention by the regulator will move towards more frequent monitoring and review of the licensed service providers. This shift of emphasis will present its own challenges with service providers themselves being required to take an enhanced responsibility for the business they conduct in order to protect the reputation of the Island (and their peers within the Island). As one service provider described to me recently "it will be the case that, if one of us drops the ball, we all do". There will need to be a greater degree of dialogue between the industry (as a whole and individual businesses) and the regulator as there will be a shared responsibility. To a large extent this is already starting to happen.

Challenging times, but a very bright future.

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
Mondaq Advice Centre (MACs)
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.


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.