This Is Guernsey

By Tom Edwards

IT’S business as usual, according to one of the island’s leading lenders. Cherry Godfrey said that Guernsey had not suffered from ‘fear factor’ in the aftermath of the credit crunch that decimated Northern Rock.

Rising borrowing costs have hit the UK as banks have struggled to find ways of funding new mortgages and some have withdrawn personal loan services.

Managing director Dave Cherry said the full impact of the crunch had not yet reached Guernsey.

‘Because of what’s happening, the mainstream lenders in the UK are being more picky about who they lend to, but from our perspective it’s business as usual,’ he said.

‘We are in an established market and our customers are affluent individuals who have been with us for years.

‘In the past when the UK has gone through rough times, Guernsey has always managed to weather that pretty well.’

Mr Cherry said that once the dust had settled and banks had announced their figures, confidence should return to the market.

‘It’s the unknown that always concerns people,’ he added.

Research done by price-comparison website Uswitch found many UK customers were struggling to borrow money.

Some 38% of people who had applied for a new credit card in the past three months had been turned down and 19% had had personal loan applications rejected.

On top of that, 6% of customers said they had seen their credit limit cut.

Guernsey Consumer Group chairman Roy Bisson said it was difficult to tell if UK credit restrictions would apply in Guernsey.

‘We are isolated from the problems to a certain extent because of our unique financial position, but we have added to the cost of credit ourselves by eradicating loan interest from income tax allowances,’ he said.

‘It is highly likely that the UK restrictions will eventually reach Guernsey and as a result islanders will find borrowing slightly more expensive.

‘Of course, there are a number of companies that are not associated with the UK directly, but they have always been more expensive.’

The approaching Christmas season presented tough financial demands on people, particularly the less affluent, added Mr Bisson.

‘I don’t think it will be a particularly tight Christmas, but the less well off people tend to rely on small loans afterwards to repay credit card debt.

‘If they can’t get those loans, that could be bad.’