Intermediary banking in the Channel Islands

The introduction of new and revised legislation and increased regulatory burden over the last few years has proven to be particular hard on intermediaries. With changing regulation, intermediaries have experienced push back from banks in relation to providing them with a level of professionalism, service and understanding. Some financial organisations are asking intermediaries to find banking relationships elsewhere or charge exorbitant fees due to reduced understanding of risk and complexity.

In addition, an onslaught of regulatory mandates, including the US Foreign Account Tax Compliance Act and The Organisation for Economic Co-operation and Development’s Common Reporting Standard, has introduced new reporting requirements. Aligned to Fatca and CRS reporting, intermediaries have sought to diversify business to new and emerging markets. The success of this diversification drive is evident in the latest figures from the Guernsey Financial Services Commission, which shows that emerging markets comprise approximately 25% of the island’s new fiduciary business.

Although undoubtedly positive from a business development perspective, clients from new and emerging markets come with added risk and complexities for intermediaries and for banks and institutions servicing them. In particular, the due diligence and know-your-client mandates associated with monitoring complex structures from a geographically diverse client base is pushing up costs for intermediary banks.

Although the burden of increased regulation has taken its toll, we believe that on balance, it is a net positive for the market. Not only in terms of ensuring compliance with international best practice but also because it has whittled down the market players to those who are truly committed to their clients’ and the islands’ best interests.

Butterfield Bank has been serving the Guernsey intermediary market since 1973 and, following our purchase of Deutsche Bank’s financial intermediary business in 2018, we were delighted to be granted the first full banking licence Jersey has issued in several years. This builds upon our commitment to the intermediary market.

On the back of this, our primary focus in 2019 is ensuring we continue to provide the financial intermediary market with the expert banking service for which we are renowned, being:

Service

Competitive pricing

Excellent customer service

Forensic understanding of our clients’ risk appetites

It is our depth of knowledge and understanding that enables us to provide our clients with viable long-term banking solutions.

After all, banking is a relationship like any other, with challenges that can strengthen or weaken the bond depending on the attitude of parties involved.

We believe that working together with our intermediary clients, for mutual success, is beneficial to us all.

Simply put, our clients’ success is our success.

Here’s to 2019 and the continuation of the Channel Islands’ reputation as a premier intermediary banking destination, in which we are very proud to play a part.