James Orrick, Managing Director of PEA, explores a necessary shift in the factors to emphasise when selling Guernsey’s financial services offering in 2017.
A “flight to quality” is often a response to market uncertainty. The historic promotional messaging about Guernsey’s established financial services offering has often cited this well-used term as a way of summarising the stability that’s on offer in Guernsey to funds and their service providers compared to other jurisdictions.
There are a number of key messages that those of us in the finance sector have long been emphasising when we articulate the benefits of Guernsey’s industry. We’re well used to reeling off expert regulation, the array of practised and professional service providers, Guernsey’s modern legal framework and political stability, in our list of key selling propositions.
A quick glance at the current growth trends would indicate that the messages must be working. Indeed, they’re particularly powerful in the context of present market uncertainty fuelled by a new UK government, the un-concluded UK Brexit negotiations and a new US President in the chair. Little wonder that the investment funds market is in full bloom and that predictions remain strong for 2017.
January figures have reported a fifth quarter of growth for Guernsey’s funds industry with the net asset value of all funds under management and administration standing at £249.4 billion, up £2.3 billion (0.9%) since June 2016. Guernsey is also the first choice for non-UK entities listing on the London Stock Exchange with 91 non-UK entities listed on the Main Market of the LSE and 33 on AIM. Notably, Guernsey leads on non-UK equity investment instruments with 74 listed on the LSE.
So, yes, the flight to quality message remains relevant. The key messages that underpin it, however, are shifting. The ever-evolving changes to regulation and tax legislation, mainly in the current forms of AIFMD and BEPS, are influencing the agendas of the investor community and it’s important that Guernsey’s financial services industry players – the key influencers of funds coming into the island – respond.
Investors are rightly prodding beyond the sole performance of funds as a key concern. Questions regarding the quality of reporting, approaches to risk management and the requirement for relevant policies and procedures are also now key items on investors’ agendas. And so, it’s responses to these concerns that we now need to consider.
Brexit is also relevant. There will be different questions about Guernsey’s links to the UK because of the unfolding UK exit from the EU. In Guernsey we rely quite heavily on people’s perceptions of the UK as a way of explaining our relationship with the UK and the EU. The UK’s voice for the Channel Islands in the EU has fallen silent so efforts are underway to further strengthen the direct links we have built. This presents a need to clearly divorce Guernsey from that uncertainty and promote the standing we have independently achieved in Europe and the stability we consequently offer.
Some messages remain relevant. Guernsey’s regulatory environment continues to evidence the quality we offer. Among our regulator’s more recent achievements include proactively securing Guernsey’s recommendation for third-country pass-porting in Europe and developing the Private Investment Fund and Manager Led Product – two fund products that substantially add to our marketing wares this year.
Also still underpinning Guernsey’s quality as a funds jurisdiction is the experience that exists across the range of Guernsey’s practised and professional service providers. It’s this experience that undoubtedly guides the efficient flow of work and contributes to the very success of individual funds.
Private Equity Administrators Limited is regulated by the Guernsey Financial Services Commission and licensed under both The Protection of Investors (Bailiwick of Guernsey) Law, 1987 and The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000.
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by James Orrick
James holds a Masters in Corporate Governance from Bournemouth University, a BSc (Hons) in Accounting and Finance from the University of Essex, is a Fellow of the Association of Chartered Certified Accountants and an Associate of the Institute of Chartered Secretaries and Administrators.