Banking marketplace for new firms ‘unsustainable’
BANKING for businesses in Guernsey is heading towards a crisis, according to a local accountant.
Tim Chilestone, pictured, a director at local bookkeeper and accountancy firm TCS, said the island needed to be set up as an economic enabler for new ventures, but the current state of business banking was more like an ‘economic extinguisher’.
‘It is time for the States of Guernsey to mandate the provision of a basic business account for any limited company or sole trader – providing the usual exclusions, of course, for historical issues with that individual,’ he said.
‘The current banking marketplace for new businesses is not sustainable.’
Mr Chilestone was responding to a call from the Guernsey Chamber of Commerce, following a number of negative business banking experiences, and concerns about customers having mainstream banking services removed with little warning. He said that if changes were not made, businesses would not choose Guernsey for their operations.
‘We were aware of a mail order operation business that was planning to set up a business in Guernsey and recruit more than 20 employees. However, due to the difficulty in opening bank accounts – including one bank that opened the account and then closed it a week later – they decided to locate it in Spain instead, meaning 20 lost jobs in Guernsey.’
He wondered if Guernsey Post could help to develop a solution, given it already has substantial cash-handling facilities.
‘Perhaps it is time to consider a Girobank-type solution within Guernsey Post or for them to partner with another retail bank to allow access within Guernsey,’ he said.
Chamber wants to exert pressure on the banks to serve business customers better, particularly those operating pooled accounts.
It has launched a survey, encouraging businesses to share their banking experiences, to identify specific pain points and areas for improvement.
Mr Chilestone said that people often focused on a lack of support for secondary banking services in the island, which were frequently unavailable for islanders, but said the main focus should be on basic business needs, like opening a business account.
‘For many entrepreneurs, SMEs or businesses looking to set up in Guernsey, it’s becoming near-impossible,’ he said.
People are waiting months for a go-ahead for a new account and faced ‘out of the blue’ closures. Some were having to run businesses through personal accounts, he said.
The Economic Development committee continues to pursue access to banking services for local residents who appear to be excluded primarily because their names do not appear on a UK electoral roll.
Guernsey Post spent almost £1m. exploring the potential for launching as a bank in the late 2000s before scrapping the idea. It has not pursued anything similar since.
