Offshore jurisdictions should join forces to lobby larger nations and international organisations on matters affecting them, according to members of the offshore financial services industry.
While there are obvious ways in which Jersey, Guernsey and the Cayman Islands are competitors, there are also issues of common interest, such as the European Union’s Directive on Alternative Investment Fund Managers and potential business synergies, according to speakers at a recent debate organised in Guernsey by international law firm Appleby that considered the relative strengths of the three jurisdictions as fund domiciles and service centres as well as possible avenues for co-operation.
“The fund industry is a long-term game,” said Jarrod Cowley-Grimmond, director for director of financial sector development at Guernsey’s Commerce and Employment department. “It is a competitive marketplace and no doubt each jurisdiction will continue to tweak their offerings to remain competitive, but essentially all of the islands should have some confidence in what they have to offer.”
Andrew Weaver, a partner with Appleby in Jersey, agreed: “There are areas of tension and competition but there are also several marketplace areas in which we need to work together, such as the International Financial Centres Forum. In group discussions, we are a collection of small islands, and we have the best chance of being heard if we speak together.”
Pressure on tax regimes in the Crown Dependencies is another issue on which Guernsey and Jersey are working together, in the view of Appleby Guernsey’s Barney Lee (pictured). “Alone we’re weaker, together we’re stronger, and we need to ensure we are resilient,” he said.
As well as the need for group lobbying on important regulatory issues, there are also business synergies between Guernsey, Jersey and Cayman, according to Alex Last, who offers Cayman fund expertise from Appleby’s Jersey office.
“Some fund managers moving to Guernsey choose to domicile their funds in Cayman,” he said. “But this trend is very positive for the Channel Islands, too, and should be actively encouraged. Cayman is vital to the continued development of the fund industry in the Channel Islands.”
Last added: “Cayman will adapt to the changing regulatory environment to remain competitive. Having said that, speed to market, flexibility and lower regulatory costs are also important. We’ve raised the regulatory bar, but there are no prizes for being the hardest-to-use offshore jurisdiction.”
Lee believes offshore jurisdictions all need to stay sharp in the current competitive environment. “It’s been a tough market in the period following the economic crisis, and the decision for business to go to one jurisdiction rather than another may be made for relatively minor reasons,” he said. “But once business goes somewhere there needs to be a compelling reason for it to move. So we need to remain vigilant against aggressive competition.”
While he believes Guernsey’s mix of regulatory rigour and flexibility is “just right”, Weaver argues that that the global climate is changing to favour Jersey’s approach to regulation and costs, particularly when it comes to emerging markets.
“Often what it took Europe 40 years to do, emerging markets are doing in much less time, and Jersey’s model will suit investors in this market,” he told the more than 130 industry members who attended the debate at the Old Government House hotel in St Peter Port.
