I think we are in a good place … Funds have had a really good year
ACCOUNTING for two-fifths of the economy and employing 21% of the workforce, it is essential that the finance industry does well.
And, despite the challenges of last year, Jersey Finance chief executive Joe Moynihan said that the sector had finished 2022 in pretty good shape, a result which he credits to the future thinking of a couple of decades ago, when regulatory legislation was brought in, and the global promotional work which is showcasing the Island as a reputable international finance centre.
He spoke to Gwyn Garfield-Bennett about the current challenges and opportunities facing the industry.
Reflections on 2022
Mr Moynihan believes that while the regulatory legislation brought in around 20 years ago wasn’t ‘popular’ with the industry at the time, its introduction formed part of a well-thought-out strategy for Jersey to be seen as a responsible and respected jurisdiction.
‘What has happened in the intervening period is that global standards have risen and some of our competitor jurisdictions are losing business because they didn’t have their eye on where the industry was going,’ he said.
‘I think we are in a good place. We are winning business from other jurisdictions because of that foresight and we’re also winning business because we invested heavily in promotion over an extended period of time.
‘Our funds business has had a really good year. As well as continued growth in funds, we have seen fund managers relocating to the Island, we’ve seen our private wealth and corporate business continue to grow and, from an industry perspective, all of the ecosystem is related.
‘Therefore, if we see a growth in business from the funds sector, that funds business needs auditing and legal advice, and needs banking, which means that the gains in one area will have an impact in other areas. Again, our banking sector has stayed pretty robust, our banking deposits are pretty steady and we’ve managed to retain a good collection of global brands which differentiates us from other jurisdictions.’
Any Brexit effect?
‘We have always been outside the EU for financial services and so, generally speaking, Brexit didn’t have a massive impact on us as an international finance centre. However, there have been spin-off impacts. How much of the current problem we are experiencing in recruiting staff is Brexit-related, given that anybody coming into Jersey has to go through the UK immigration scheme? The UK has the same problem as we have. It can’t get skills and a lot of that is because of Brexit.’
Has Brexit increased anti-Jersey attitudes from Europe?
‘We have seen a number of Jersey-based funds getting investment from government development agencies, which we never saw in the past. The World Bank has been involved with a fund that was recently put together to invest in Africa. The World Bank does its due diligence on centres and if it thought there was a specific issue, it certainly wouldn’t want to be associated with a jurisdiction. We have seen a couple of European country government development agencies investing through Jersey into other jurisdictions.’
What about the OECD’s potential corporation tax framework?
‘Based on what we know, we are pretty keen to ensure the industry is protected and I think government is aware of the importance of those negotiations but they are ongoing and, at the moment, they are looking at businesses of a certain size which will not affect a lot of our industry.’
‘There is plenty of opportunity but some of that is being driven by question marks about other jurisdictions. Institutional investors want to deal with high-quality jurisdictions and, as a consequence, that is feeding into our funds growth.
‘On the private-wealth side, families are much more keen to try and ensure they have proper succession planning in place and that they have proper structuring in place so we have seen a growth in family office.
‘Also, increasingly, they want to see that the wealth they have is aligned more to their own personal values, particularly with the next generation coming through and that’s why we have seen a lot more growth in the philanthropy area.’
‘It’s the biggest single issue for the industry. For us, as an industry, we want people with good communications skills, we would ideally like some people with digital expertise, and many of the kids coming out of school have plenty of digital skills so it’s not all about numeracy. That is important but we have so many roles. Somebody with the right attitude to work, good teamwork skills, good communications skills is very valuable. If we get those sorts of skills, the technical stuff we can teach. I sometimes upset people by saying that a lot of what we do is not over complicated.’
‘We will continue to see challenges across all aspects of the business, be that from external negative commentators or be that on global changes to tax, but one of the things about Jersey is that we are a very resilient jurisdiction. We’ve got a fantastic pool of expertise and talent here and we’ve been able to weather a lot of storms.
‘If you look at the industry 30 years ago and look at where it is today, it has changed so much, and it will continue to evolve.
‘If you look at the source of business and the type of business, you have to be adaptable.
‘We can’t be complacent. What looks great today might not look so clever in 12 months’ time for us.’
What would a good 2023 look like?
‘A continued flow of new business. A good report from MONEYVAL. A positive result from our investment in Singapore, and really that the industry continues to be vibrant.
‘I would also like to think we can work more to reposition our Jersey For Good campaign both locally and away from the Island. We will continue to do the advocacy work. There are some who will never change their views but there are some who just need more information.’