Guernsey ‘plays it safe and loses out on funds’
LUXEMBOURG has been able to ‘steal a lot of business that would otherwise have come to Guernsey’ because the island has played it safe, says a finance chief.
Paul Smith, chairman of the Guernsey Investment Fund Association, said that Guernsey had not shouted enough about its commitment and implementation of high standards of regulation and tax transparency.
‘We have definitely lost ground recently to Luxembourg, who have not been shy in making unsubstantiated claims about their industry,’ said Mr Smith speaking at a Guernsey Funds conference organised by BPP Events.
The GIFA chairman questioned Luxembourg’s claims around compliance with regulations designed to prevent so-called ‘profit shifting’, the requirements of the post-Brexit market and the jurisdiction’s ability to service the business it was currently attracting.
‘Guernsey has played it safe and not wanted to make such claims but, in doing so, we have failed to impress on the wider fund industry the attributes that we do have and this has enabled Luxembourg to steal a lot of business that would otherwise have come to Guernsey.’
However, Mr Smith said that Luxembourg could be ‘over-heating’ – opening up an opportunity for Guernsey to pick up more business over the next 12 months. Luxembourg’s service levels could also fall while prices increased amid under increasing scrutiny of the country’s finance sector.
‘Luxembourg has undoubtedly benefitted from having Jean-Claude Juncker as the European Union president, but he steps down in 2019 and Luxembourg will lose this vital protection within the EU,’ said the GIFA chairman.
He added that the traditional strength of Guernsey’s fund industry when it came to being flexible and innovative would stand the island in good stead amid changing regulatory and technology developments. Work is also under way to develop new markets, including the USA and South Africa.
However, a shortage of staff needed to be addressed – particularly at the more junior levels.
‘Consideration must be given to bringing in new talent to train up to become the senior managers and business leaders of the future.
‘With the core base of experience already here and the drafting in of fresh talent with new ideas and knowledge we can have a strong workforce able to find the best solutions for new clients,’ said Mr Smith.
He also stressed that the fund industry was in good shape. ‘Guernsey has the ability to build on its reputation as the leading jurisdiction for innovation, expertise and quality of service.’
