THERE are lots of competitions and awards for international finance centres, although not all of them are worth having. However, the annual Citywealth IFC Award is one of the most prestigious, and Jersey has just won the title of Citywealth IFC of the Year for the 11th time. I guess that means we can keep the trophy.
The award is said to highlight the excellence of the financial advisers and managers in the huge private-wealth sector, one of Jersey’s most lucrative areas of business looking after something like £458 billion of other people’s money as well as £157 billion in bank deposits.
We’ve been offering these services for more than 60 years, so we should be pretty good at it, as indeed we are. It’s a highly competitive area of financial services, with rivals such as Guernsey keen to replace us at the top perch. They nearly did so this year, coming in second in the awards.
Our Island’s success is the result of a lot of hard work by many people, including the promotional agency Jersey Finance, which is still a relatively small organisation doing a very big job in selling the Island around the world. At the beginning of this century it was staffed by not much more than a man and his dog, but it has had to grow as the industry has grown.
As Jersey Finance’s chief executive Joe Moynihan told Business, the organisation has not only to satisfy its member organisations, who pay for part of its running costs, but also the Island’s government, which pays for the rest. They are both pretty demanding taskmasters, so Jersey Finance has to ensure it provides both of them with good value for money. It is pretty evident that the organisation does this at the moment, but what about the future when competition becomes even tougher and regulations even tighter?
The current arrangement works well, according to Mr Moynihan, and Jersey Finance and Guernsey Finance are friendly to each other, co-operating in some ways but then competing head-on in a few activities, such as the lucrative private-wealth industry, where the islands’ offering often overlaps.
Both agencies have enough on their plates to perhaps consider making any dramatic changes to this relationship, and the governments of Jersey and Guernsey are hardly the best of friends. They often talk about closer co-operation, but only do so when it is clearly in their own best interests or there is no alternative.
However, critics who believe the islands should be working much more closely together might well consider that joint promotion of the most important industry to the advantage of both is a no-brainer. Wouldn’t combining the efforts of both Jersey Finance and Guernsey Finance either cut their costs or mean they could spread their resources much further, covering areas they currently wouldn’t consider?
After all, most of the users of both the islands’ finance offerings understand what the Channel Islands are about, and the less knowledgeable don’t think there is a difference between them in any case. They are simply Channel Islands’ clients or participants in a Channel Islands’ industry, so why do they need two promotional agencies or even, perhaps, two regulators? After all, it is very unlikely that regulations in the islands will do anything other than converge.
Of course, the islands would remain different and it would sometimes be worth emphasising the differences but not when red tape is concerned. That should be eliminated wherever possible and standardised where it is not.
The finance sectors of both islands have their own specialities, and these will remain even if a joint marketing organisation takes over to help promote them.
Perhaps co-operation like this could eventually extend to supervision and regulation, which might also mean the islands working much closer together in improving the free flow of skills from one island to the other.
This should mean the finance industries benefit from the greater scale produced through joint working. Perhaps this co-operation could then be extended to other industries, particularly tourism, where the benefits of joint working are also obvious.
Full political integration is out of the question, of course, although I’m not sure why, but there are genuine benefits in working more closely together as a bigger whole. For example, both islands increasingly boast about the contribution they make to the UK and other jurisdictions, particularly in Europe.
New research by microeconomics consultancy Frontier Economics, for example, estimates that the value of investment by Guernsey funds into the UK last year was £57 billion, up 14% since 2020. Guernsey’s captive insurance sector, which dwarfs that of Jersey’s tiny insurance industry, also saves UK FTSE 100 companies almost £100 billion a year. Another report in 2016 had already found that Jersey’s finance industry added net value of about £14 billion to the UK economy, supporting an estimated 250,000 jobs.
These are all big figures from the islands, which, if added together, produce staggering estimates of the total contribution the Channel Islands economy has on people outside of the islands.
This makes them sit up and think and should help to give the islands considerable clout as a whole. Should we co-operate to the extent of bringing down the costs involved in producing these benefits or else increasing the benefits, then more people outside our boundaries will appreciate that.
They will realise that we have an important role to play in the world as Channel Islanders.
