Writing for IFC Review's Guernsey 2020 report, Guernsey Finance Chief Executive Rupert Pleasant takes a look back at 2020 and how Guernsey's key strengths can pave the way to a brighter future.
We leave 2020, a year which will certainly go down in history for all the wrong reasons, with the world perhaps a more uncertain and complex place than ever before.
But taking a global view from Guernsey, I am encouraged that I can reflect on our core strengths of stability, security and substance being ideally suited for these times.
Our research over the last couple of years has highlighted that these are the strengths that investors and clients consider to be important, and Guernsey scores exceptionally highly on these issues.
Despite the Covid headwinds, we have seen the "flight to quality" continue in 2020. So, despite Covid restrictions, we market ourselves, promote ourselves, and continue to develop product, with a specific focus designed to facilitate the migration of funds, their managers and limited partners. And with this focus on migration, we are seeing funds and managers move to Guernsey from jurisdictions which have struggled to match our whitelisted status.
While Guernsey went into lockdown along with near neighbour countries at the end of March, we were out again in June, with the island Covid-free, and that has largely been our position ever since, with inbound travellers subject to strict quarantine.
That has meant that, largely, island life has continued as normal, and the natural resilience we pride ourselves on as an island nation has been reinforced. In these times, resilience has certainly risen in the factors considered when choosing a jurisdiction.
One of the speakers on an international insurance webinar we hosted earlier this year summed up her experience of dealing with island firms during lockdown – "Guernsey never missed a beat" – and our traditional high levels of cost-effective service have also come to the fore.
The ability to service clients effectively also comes from our natural substance – as economic substance has come to the fore in recent years, Guernsey was quick to spot this trend and respond accordingly, though, in many ways, the measures simply reinforced "business as usual" for the island, with our relatively deep resources of people and expertise across financial services.
That we can talk about quality of service but also cost-effectiveness can come as a surprise to some, but as a jurisdiction we do compete very well on cost with our rivals, both "offshore" and "onshore".
My background is private wealth and the trusts industry. Guernsey was among the first jurisdictions in the world to introduce regulation into this sector. So we are well used to it. But it is hard to imagine that we would have moved, within 20 years, to a situation where being considered to be well-regulated would be seen as a competitive advantage.
However, that is where we are. Particularly in a post-Covid world, where people need to be aligned with positive choices in terms of their investments and the jurisdiction they are doing business with.
We are moving to a binary choice when it comes to doing financial services business – choosing a jurisdiction which meets international standards, which is not featured on blacklists, or sailing closer to the wind. And if you can achieve the former while still doing so at reasonable cost, then the choice becomes even more stark.
Guernsey has a long history of innovation. Ever since we became recognised as a financial services centre, we have been innovating to place ourselves ahead of the competition.
Innovation is key to our future in Guernsey. We are, by nature, flexible and nimble. Our self-governing status is a huge advantage for us to respond to market competition or to make the most of opportunities.
Guernsey has always been good at developing innovative ideas. We have a regulatory and jurisprudential regime that empowers – not discourages – individuals to innovate, both in fund structures and investment strategy.
Guernsey does not stand still. We continue to grow in intellectual capital and in our international reputation, proving ourselves a jurisdiction of substance and stability.
In the past couple of years we have seen this across all sectors in Guernsey's industry, whether that be with new products such as the Private Trust Company and Private Trust Foundation, or honing regulations in insurance and funds to develop fast track regimes.
The Guernsey Green Fund was launched in 2018, but still stands out as a world-first in launching a regulated "green" product underpinned by international standards.
We have also seen a rapid acceleration locally in the adoption of digital solutions for client onboarding, following confirmation of regulator's view on its use, and the development in the island of digital AML solutions, which addresses an issue which had become a genuine threat to our sector, with the cost and time being consumed over an administration process.
In spring 2019 we were facing an altogether different threat from the coronavirus – a genuine constitutional threat to the island's relationship with the UK Government over public access to registers of beneficial ownership.
Guernsey continues to adopt the highest standards of compliance and transparency in line with relevant authorities and global norms, while recognising the explicit differences between transparency, privacy, and secrecy.
Our position is that a public register of beneficial ownership is not a "silver bullet" for improving transparency. Verified and accurate information on a private register, where access is granted to relevant authorities only, as in Guernsey, is a far more robust and effective approach to combating harmful tax practices than having unverified information available to all.
We can be confident that we are meeting international standards with a very strong and robust story to tell.
Guernsey came through the global financial crash in 2008, has proved to be robust and resilient so far during the Covid crisis, and I am sure that we are set for a prosperous future.
Our engagement with the sustainability agenda and climate change is particularly on message with global trends. We are geared up to meet the need for investment and capital flows in this sector, particularly the requirement for private capital to take a stake in this debate.
Our package of flexibility, innovation, reputation and substance sets us up very well. We may be all hunkered down, to some degree, at present, waiting for the world to change. We have weathered some powerful threats since the financial crisis, and the work we have put in over the past decade will put us in a good place for the next 10 years and beyond.
This article first appeared in IFC Review's Guernsey 2020 report, published December 2020. To view the full report, click here.
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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