Guernsey: Excellence In Fund Administration And Custody

Last Updated: 4 August 2009
Article by Alan Brint

Most Read Contributor in Guernsey, September 2016

Originally published in Corporate INTL, July 2009

Managing all the requirements of the many different and varied funds using Guernsey's services can be a demanding process, particularly with the different demands from retail funds, authorised funds and registered funds and the specific skills required to administer and provide custodian services to private equity and hedge funds.

RBC Wealth Management serves high net worth individuals and institutional clients in select markets around the world.

Our Corporate & Institutional team provides global tailored fund administration, custody and banking solutions.

Its banking capabilities enable it to offer services ranging from fund valuations and accounting through to executing trades and settling transactions. Other traditional banking services are provided including interest bearing accounts, fixed term deposits, forward foreign exchange, bridge financing and treasury management.

Registered funds regime

Guernsey's registered funds regime and, in particular, its self-certifying qualifying investor fund, puts the onus on administrators to thoroughly understand a fund before agreeing to provide services to it.

Alan Brint, head of RBC Wealth Management's Corporate & Institutional business in the British Isles, says RBC Wealth Management is serious about making sure it fully understands potential clients before engaging with them.

He said: "The due diligence requirements for the acceptance of new business have always required that from the outset of any proposals, RBC Wealth Management obtains and maintains sufficient information and due diligence to evidence that it makes a decision to engage with strategic partners of substance and reputation. The collection of this data and the ability for RBC Wealth Management, as administrator, to self-certify the applications for new funds has been an important selling point to new fund promoters as it cuts down the timeframe for approvals and allows funds to be launched in line with both promoters' and prospective investors' requirements."

Mr Brint says the advent of the registered funds regime has enabled Guernsey to gain a competitive advantage over other jurisdictions in terms of speed and flexibility, but still relies on the high standards and regulations set by the Guernsey Financial Services Commission (GFSC) and observed by administrators and custodians.

He said: "Whilst the registered funds may be unregulated by the GFSC, promoters and investors will recognise that as an industry, Guernsey administration and custodial services are highly regulated and that the service providers themselves are subject to ongoing regulatory supervision and monitoring. Like other fund administrators, RBC Wealth Management promotes the highest standard of care which is not diminished because of a funds Registered status versus Authorised."

Servicing non-domiciled funds

Fund managers generally choose a domicile for a particular fund depending on a number of factors, including geographic location, time zones, tax regimes, tax treaties or the location of investors.

The administration of the fund in question does not have to be done in the same jurisdiction as its domicile and, correspondingly, the criteria for choosing a location for administration and custodian services are different.

Figures from Guernsey Finance show that, at the end of 2008, £45 million worth of funds not domiciled in the island were administered there. That figure has increased from £17 million in 2004.

Factors such as a stable political climate, advanced regulation and an established financial sector are important when choosing an administrative centre.

Mr Brint believes this is one reason for Guernsey's success.

He said: "Guernsey has built up an enviable reputation for excellence in fund administration and custody. The global relationships Guernsey has developed during the years has led to introductions and recommendations on the quality of the services provided. This has attracted business that has already been established in other centres. The service providers in Guernsey are transparent in their service commitments, provide attractive system capabilities, employ knowledgeable and experienced staff, are attentive to detail and are able to build bespoke reporting to enhance investor confidence and comfort."

He added: "It is vital for any business to ensure that as a minimum, a Memorandum of Understanding (MOU) is in place, but for a highly regulated jurisdiction like Guernsey the majority of administrators will be taking this further by agreeing Service Level Agreements detailing the timelines and expectations of all parties, score carding deliverables and documenting regular relationship meetings. This is valuable evidence for, sponsors and the boards to review and discuss. It also enables Guernsey businesses to ensure they understand the risks, know their clients, fully understand their products and service offering, and be available for general audit or regulatory visits."

Specialist funds and PCCs

Complementing our services, RBC Corporate Employee & Executive Services (RBC cees) delivers high-quality plan management and employee trust solutions for share and stock plans, international pension plans and employee benefits including custody, banking and treasury facilities.

Services include the calculation of placement and advisory fees, payment of distributions and issues surrounding investment commitments and draw downs.

Mr Brint says RBC Wealth Management has been successful in attracting private equity vehicles and property fund business.

He said: "These funds sit beside our alternative and vanilla fund vehicles in both custody and administration. Comprehensive corporate governance and robust pricing and accounting procedures which are in place for traditional fund vehicles have been expanded into private equity and property funds to ensure the highest levels of accuracy is maintained and that boards receive comprehensive reporting."

The protected cell company (PCC) or incorporated cell company (ICC) are widely used structures across the world and have become particularly popular in specialised areas such as private equity or funds of hedge funds that need to split investments by asset class or currency and keep them in the same umbrella structure but limit the liability between each cell.

Mr Brint said: "PCCs are useful structures for sponsors who specialise in Fund of Hedge Funds where currency classes feed into one or more master portfolios within the same limited company or where limited companies wish to segregate traditional asset classes from alternatives. ICCs allow funds go one step further, as the individual cell is a legal entity in its own right and allows the cell to contract directly with prime brokers or credit providers. Again, this is a useful vehicle for white labelling cells for investors with different investment needs."

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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