Channel Islands leaders are confident about relations with the new UK government – including Vince Cable, the Liberal Democrat business secretary who is renowned as a vigorous critic of “tax havens”.
Officials from Jersey and Guernsey have also found a receptive audience during recent visits to Washington to discuss issues such as financial regulation with their US counterparts and lawmakers.
Maintaining good relations with leading members of the G20 group of leading economic powers is particularly important at a time when new financial regulation is under discussion on both sides of the Atlantic and both the European Union and the US are preparing legislation that would impose new supervision and disclosure requirements upon alternative funds and/or their managers.
Guernsey’s chief minister, Lyndon Trott (pictured), described Britain’s new minister for justice, Ken Clarke, as “a man who understands Guernsey’s business model and importance to the City of London”, while Jersey Finance chief executive Geoff Cook says the coalition is “very positive, both for the financial markets and the stability of the UK as a whole”.
However, Cook notes that Cable has “on occasion been openly critical of offshore centres such as Jersey”. He says he will encourage Jersey’s government again to extend an invitation to Cable to visit the island.
According to Trott, the new business secretary has been ready to listen to other views on the nature of the Channel Islands as offshore jurisdictions. “I have briefed Dr Cable personally and he has demonstrated since then a much greater understanding of the issues affecting Guernsey,” the chief minister says. “Since then he has not to my knowledge referred to the island as a tax haven, preferring, like me, the label of low-tax jurisdiction.
“Now Dr Cable is aware that we have no banking secrecy laws, we have full anti-money laundering and counter-terrorism legislation in place, and importantly have tax information exchange agreements in place with all our major trading partners including, of course, the UK, where the majority of our business relationships are.”
However, Cook says Jersey’s financial services industry is now “watching with interest to see what elements of each party manifesto will now be adopted.
“The Conservative approach has traditionally been pro-financial services and pro-business, but some policies under consideration could also impact the finance industry, for example the proposed levy on banks, a change in the Bank of England’s role with respect to regulation, and a possible stance towards bankers’ remuneration.”
Trott welcomed the UK government’s new Treasury line-up. “The new Treasury team are people with whom we can have a very good working relationship,” he says. “Over the past two years I have met and briefed a number of them on Guernsey, our commitment to tax transparency, and our business and regulatory model. I think they understand us, and I think they feel able to work productively with us as well.”
As well as engaging with their new UK partners, the Channel Islands have been enhancing their representation in Europe and the US. Representatives from both islands have recently visited to Washington to meet US government officials and members of Congress.
Earlier this month Trott met Bob Roach of the Senate Permanent Subcommittee on Investigations, assistant US Treasury secretary Michael Mundaca, and members of the Multi-State Tax Commission.
“The people we meet in Congress as a whole are increasingly recognising our model of best practice in terms of our regulatory environment and tax transparency process,” he says. “I’m confident that we will have a direct taxation agreement with the US authorities in the future, because it was with them that we signed our first tax information exchange agreement in 2002.”
Jersey’s director of international finance Martin de Forest-Brown adds that Jersey, from which officials visited to Washington in March, also has “a good message” for the US regarding its ‘white listing’ by the Organization for Economic Co-operation and Development and its latest assessment by the International Monetary Fund.
“It’s important to stay in touch with the US, and we are keeping in touch with regulatory developments there,” he says. “Senior officials try to go at least once a year, just to update them on developments and keep in touch with some of the key decision-makers.”