Guernsey welcomes British Offshore financial centres review

Thursday 29 October 2009

An independent review of British Offshore Financial Centres, published today, is a solid endorsement of Guernsey’s economic contribution to the UK economy, the island’s economic management, robust regulatory regime and adherence to international standards on tax information and transparency.

In particular the review noted that:
• Guernsey and the Crown Dependencies set an example for other offshore financial centres to follow

• Guernsey and the Crown Dependencies provide significant economic benefit to the UK and the City of London, providing a gateway for funds to flow into the UK economy which would not otherwise route into the United Kingdom. UK banks had net financing from Guernsey of $74.1 billion at the end of June 2009

• The finance industries in the Crown Dependencies generate significant professional fees for UK lawyers, accountants, fund managers, compliance and advisors, and that the Crown Dependencies are an important factor in London’s pre-eminence as a global financial centre

• Guernsey and the Crown Dependencies have conducted prudent and successful economic policies in recent years through the building up of reserves

• Guernsey and the Crown Dependencies have developed, to a significant degree, robust medium-term fiscal and economic planning and strategies which have better placed the Crown Dependencies to withstand the rigours of recent global economic turmoil

• The decision of the Channel Islands to review their fiscal strategies, and the way that Crown Dependencies are taking action to combat the effect of reduced revenues due to the economic downturn, have been noted positively

• Guernsey and the Crown Dependencies commitment to meeting international regulatory standards and co-operation and Guernsey’s introduction of a depositor compensation scheme

• Guernsey’s commitment to fighting financial crime and its commitment to properly staffing and resourcing its Financial Intelligence Units.

Chief Minister Deputy Lyndon Trott welcomed the findings of the report today.

He said:
‘In my view this report vindicates the position of Guernsey and the other Crown Dependencies. Mr Foot finally confirms the issue that the three Crown Dependencies do provide a positive economic benefit to the UK.

‘There is also a positive endorsement of our decision to review our fiscal strategy.

‘At the time of its announcement, we believed that the Foot Review would be an opportunity to dispel some myths about our financial services sector. I believe unequivocally now that we have been proved correct.’

Lord Bach, Minister for the Crown Dependencies at the Ministry of Justice, said:
‘I welcome the publication of this considered and helpful review. As it recognises, the Crown Dependencies have much to be proud of in terms of meeting high international standards.

‘This is, however, a fast-changing and increasingly complex financial environment. The report is clear that there is no room for complacency and we are confident that the Crown Dependencies will continue to lead the way in terms of meeting new standards as they evolve.’

The UK Government commissioned the review at the end of 2008. It was carried out by Michael Foot, a former managing director of the UK Financial Services Authority, an appointment which followed a long career at the Bank of England. He visited Guernsey earlier this year as part of his investigations.

The States of Guernsey positively welcomed the review and fully engaged and supported Mr Foot’s team. The review also received submissions about the local finance industry from a number of bodies, including the States, GIBA and individual businesses.

The wide ranging review covered the Crown Dependencies (Guernsey, Jersey and the Isle of Man) and British Overseas Territories which are involved in international finance.

The review was commissioned as a result of the global economic downturn and was designed to look at a host of areas including future financial supervision, transparency, taxation, management and international co-operation as well as the role of these jurisdictions in the global financial services industry.