Offshore finance review ‘could make future more secure’
Wednesday 11th February 2009, 2:29PM GMT.
Lord Bach from the UK Ministry of Justice, right, and Chief Minister Lyndon Trott at Frossard House yesterday. (Picture by Adrian Miller, 0718613)
A MORE secure future for Guernsey could emerge as a result of the independent review into British offshore financial centres, States members heard last night.
The supportive comments came during a special States of Guernsey dinner for Lord Bach, who has responsibility for the Crown Dependencies at the UK Ministry of Justice.
Responding to comments from Chief Minister Lyndon Trott, the Parliamentary Under Secretary of State for Justice said he was delighted the island shared his view that the so-called Foot Review was welcome.
He was certain the UK and Guernsey would work together to secure a strong future and that the bond between the two jurisdictions would be strengthened by a willingness to tackle issues.
Lord Bach spoke of the joint commitment that existed to improving standards – a reference to financial regulation – and said the MoJ would work with the review by Michael Foot, which is looking at financial supervision and transparency; taxation in relation to financial stability, sustainability and future competitiveness; financial crisis management and resolution arrangements; and international cooperation to ensure the island’s situation was clearly understood.
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Certain members of the Uk and European goverments will forever be looking for ways to shut down what we have.
Unfortunately they seem to have better PR people than we do!
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Self-determination and self-regulation. My hope is that Lord Bach reports back to Jack Straw (MP) and advises him that Guernsey has a sound future as a well-regulated offshore financial centre.
GFSC must have the autonomy and ability to regulate our own affairs. Keep it simple. Keep it local and hey presto, the blue sky is our limit.
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If Guernsey is not in a position to safeguard depositors’ money in its high street banks, then I do not see any future for its retail business. And this starts with Guernsey helping out LG depositors. Guernsey is the only place on earth not to have done anything meaningful (and no, I don’t count Trott’s getting the mobile phone number of the Icelandic finance minister as meaningful) for their local depositors.
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Offshore Optimist
I wonder how the claim that Guernsey is a well regulated finance centre fits with the uncorrected recent comments of Peter Neville to the Commons Committee
““The FSA knew of our concerns in respect of the fact that we did not want there to be any Icelandic risk in respect of the UK bank, with which 25% of the Landsbanki Guernsey assets were placed, and we did not want there to be any dependence on the parent for liquidity, and we got the assurance from the FSA that there was only limited Icelandic risk.
We believed we could rely on the FSA because they had greater information and greater influence and, therefore, we were very surprised when Landsbanki Guernsey failed, partly because it could not recover from the UK bank the money deposited with it” End of quote.
Seems Mr Neville and his colleagues had far more confidence in the FSA than many others.
There is the obvious question as to why the GFSC ignored all the other warnings about the Icelandic banks?
Hardly inspires confidence in its ability as a regulator.
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Indeed, Stephen John.
Also the fact that regulators around the world are having their competences and procedures questioned raises issues to if such seemingly high calibre organisations with trusted and experienced staff can make such fatal mistakes or oversights, how the GFSC, and those that continually stake our islands reputation on their expertise, can possibly be seen in any other light than ‘debatable’.
Couple that with the actuality behind our much vaunted tax exchange schemes and it becomes hard to understand the optimism. Countries can only demand information if they know who the beneficiaries are. We specialise in hiding that information. Are you there David? Say it ain’t so!
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Fast Robert
The Commons Committeee transcripts on the banking crisis show how willingness to blame others.
The Association of Independent Financial Advisers, Local Government Association, regulators etc blame anyone bar themselves for theeir predicament. There is also the simplistic faith in the FSA, regardless of whatever else was going on, and whatever evidence existed.
In one case the local authorities representative was asked by rhe Chairman if “high risk” when mentioned in respect of Icelandic banks, meant red alert. The answer was that this was only one of the elements of advice that local authorities and others deal with.
Strangely, when ascribing blame to the FSA for their predicament the other elments seemed to have been ignored by so many of the professional witnesses.
When reading the document, the comment of the heckling cricket fan continuously comes to mind “Lend me your brain, I’m building an idiot”. I wonder why?
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Fast Robert
Yes I am here.
Lessons are being learned by regulators all over the world and its fair to say that the regulatory regime will see big changes globally. Its inevitable. Having said that, I don’t personally believe that its the individuals within regulatory bodies who are primarily at fault, more so the overall regulatory system which has shown to be defective.
You must remember that every single one of Guernsey’s banks, for example, is a subsidiary of a bank which is itself regulated elsewhere, and that bank must be in the world’s top 500 and regulated in a country which operates a suitable regulatory system. Yes, I know that Iceland is now highly questionable under that test, but many regulators around the world, including the UK, were deeming Icelandic-owned and Icelandic-regulated banks to be acceptably regulated until 6 months ago. That whole system will now become “more fussy”, which is even more relevant seeing as the credit ratings of so many world banks are being devalued. It is fair to say that being ranked in the top 500 banks worldwide a year ago meant a lot more than it does today. Being a top 100 world-ranked bank is now more appropriate, and arguably even that’s not enough.
Yes – TIEAs do require the requesting country to provide specific requests for information rather than fishing expeditions. But a TIEA is a 2-way agreement and the UK and the US (as well as Germany, France etc) provide exactly the same level of public beneficial ownership information concerning companies and trusts as Guernsey does. Guernsey simply could not find out beneficial ownership information of a US or UK company or trust from public information and so the TIEA works the same way in both directions. That is an extremely relevant point when Guernsey and other offshore finance centres are unfairly criticised for not publishing such information. I can well understand the suggestion that offshore finance centres should operate to the same standards as onshore jurisdictions, but there is absolutely no reason why we should operate to far higher standards than them. To put the point into perspective, please tell me which countries disclose beneficial ownership information to the public.
Therefore in answer to your question, its not true to say that Guernsey specialises in hiding beneficial ownership information. To be a specialist you have to be providing a service which the majority don’t provide.
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David
The failures are systemic, yes, but systems have designers and managers. Blind spots have been obviously hard-coded – the old boys’ networks all believe each other when they keep repeating that everything’s fine and dandy as long as the personal fortunes are amassing, senior executives are trusted implicitly and they surround themselves with yes-men. It ceases to become regulation and is in fact facilitation for some and obstruction for others.
It is the PR that annoys me most. Just because we are better than others doesn’t mean we are perfect. We use the excuse that others are more imperfect to protect are specially designed systemic imperfections. These imperfections benefit us, so it makes sense at that level, but the language is smug.
I really don’t see the difference between onshore and offshore finance centres. They’re all in the same game of funneling wealth for the few away from democratically elected governments. If I were sitting in the City I would still say ‘we’ are specialists at secrecy. Of course the problems have to be tackled multilaterally, but it is the sheer ‘nothing to see here’ mentality that I find distasteful, from all sections of senior finance executives, everywhere.
To deny that creating systems to hide money from democratically elected governments so it can’t be taxed is detrimental can be analagous to hiding half your pay packet from the wife when she controls the housekeeping, and then boozing the friday night away. She will complain she can’t clothe the kids and you will shrug vaguely saying how hard you work.
Basically it is irresponsible, anti-social and a snub to democracy and the progress of civilisation.
It is a global problem, and Guernsey is a small, but noticable, blip in the scheme of things, but we must not be compacent and trumpet the bare minimum we are doing to appease reformers. It is clear that the UK Gov. is duplicitous in these matters which is why nothing has been done, but with a speculated decade of recovery from the finance industy’s incredible and devastating ineptitude it is clear that things will change.
Unlike those four ex bankers who shrugged out their apologies, we must acknowledge the role of our instruments and make noises to reform the way we do things. It may well be that we would attract more business by being honest. Otherwise we continue to attract dishonesty, be it unfair attacks, or people being anti-democratic.
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David
Seems more like 11 months since there were concerns about Icelandic-owned and Icelandic-regulated banks being acceptably regulated.
What some of us feel is that there was sufficent writing on the wall for regulators to be concerned about Iceland.
What we do know is that the GFSC relied on the FSA, and assumed because the FSA hadn’t told them of problems, that all was well, despite so much evidence to the contrary.
I think your comment that the overall regulatory system is to be questioned is appropriate. It does seem to be that if you tick the right box all is well, regardless of what is in the box.
So far as people in regulation are concerned, they must accept some blame. Surely they have the ability to think about the bigger picture, and to question the framework in which they operate?
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