By Ben Shenton
FOR the past ten years, I have been a spokesperson for people working within the finance industry who did not want to speak out themselves. The opinion of many in that industry was that the regulator had a Victorian attitude to governance, which was stifling growth. They talked to me – confidentially, as they were genuinely worried those in power would make life difficult for them if they spoke out. In the early days of the finance industry, we were regulation-light, and growth was impressive and beneficial to the majority.
Regulatory nirvana?
Then, the government took more interest and began chanting the mantra, “If we regulate enough, they will come”. Sadly, many didn’t come – instead preferring places where the regulator didn’t greet you like a nightclub bouncer with a grudge.
I have mentioned on many occasions about reading in a US financial magazine of a global agreement to “shutter” tax havens by making them so regulated they close themselves down. The plan was brilliant. It would depend on the experts in these jurisdictions being not as astute as they believed themselves to be, groupthink, and it would need them to reach the conclusion that being heavily regulated was nirvana.
As a result, we turned compliance into an Olympic sport. Businesses gasped for air while we handed out medals for “Best Interpretation of Paragraph 14(b)”.
Meanwhile, Jersey Finance cheered from the sidelines, chanting, “regulation is reputation”, as if reputation and compliance paid the bills.
Cult of compliance
As a result, the Island became a place where banks and trust companies were being suffocated by compliance, the regulator became completely unhelpful and Jersey Finance acted like they had been converted into a cult worshipping over-regulation. I watched as people in the industry told me of business going to less officious, pedantic and difficult jurisdictions, while local companies expanded overseas to facilitate new clients.
And heaven forbid you question the high priests of regulation. Do that, and you’re instantly branded a social-media troll, a maverick or – my personal favourite – someone who “doesn’t understand the complexities”.
My invitations to official events? They vanished faster than common sense in a policy meeting. I even started declining the few that trickled in, just to spare others the awkwardness of sitting next to the Island’s resident heretic, or risk them being branded as someone who passed me information just because they spoke to me. After all, in the Church of Compliance, guilt by association is a cardinal sin.
It’s not just in the finance arena that the experts get it wrong. I appear on the Curtis Warren Wikipedia page. Warren was entitled to standard legal aid, but the experts decided taxpayers should fund a top-tier lawyer instead.
I was not happy that we should pay for a senior lawyer, and, when I asked why we were burning through public money, the experts assured me we’d claw back millions in confiscated assets. In the end, we didn’t get a penny, and it turns out the only thing we successfully confiscated was common sense.
Expert opinion
Another example. Back in my Senator days, I proposed paying off the pre-’87 public-sector pension debt – a radical idea, apparently. The experts lined up to tell me why it was nonsense, and the proposition was crushed under the weight of their wisdom. Fast-forward a few years: those same experts had a miraculous change of heart and paid it off anyway… at a much higher cost.
On another occasion, I witnessed a government politician, when given a consultant’s report that disagreed with his view (on a subject he had no real knowledge of, apart from a conversation with a bloke in the pub), decide that rather than change his mind under the weight of evidence before him, he would instruct the chief officer to find a consultant who would back-up his view – and he did eventually (a one-man-band consultant living in the UK).
In the world of politics, truth isn’t absolute – it’s just a matter of hiring the right person or disclosing only the facts that will support a policy.
Too little, too late
I questioned the wisdom of rolling out the red carpet for Roman Abramovich, suggesting that courting oligarchs might not turn out to be the best PR move.
Those in power, who had listened to the experts, lined up to scold me for my lack of vision. Fast-forward: he’s now suing us – and, trust me, the data issues he’s complaining about aren’t just his problem. Turns out, if you invite trouble to dinner, you shouldn’t be surprised if it hangs around and sullies your reputation.
Anyway, I did get a nice early Christmas present. After a decade of pointing out that the anti-business culture of the JFSC was destroying the finance industry, the government has at last said: “We need to change our mindset, and understand that it is no longer a privilege for financial services businesses to operate in Jersey: it is now a privilege to serve them.”
A decade late, but applause nonetheless. Unfortunately, while we were busy congratulating ourselves for fixing a problem they created, the world has moved on. The global AI-in-banking market is projected to hit $132.9bn by 2030, and more than 85% of financial firms already apply AI. Yet Jersey’s latest strategy papers barely mention it.
As Gandhi observed: “The expert knows more and more about less and less until he knows everything about nothing.”
Wake-up call
I could stand at the next election, hoping to help repair a mess that was created because no one listened the first time. But realistically, my election would make little difference. Why? Because the Island remains in the grip of groupthink and an inflated sense of brilliance among those who are neither as wise nor as capable as they believe.
Decisions continue to be shaped by individuals with too much power, too much self-interest and no real intention of listening or learning. The result? The so-called “experts” will go on being experts at getting it wrong, and the public, whose voices should matter most, will remain sidelined and ignored.
The truth is simple. The system isn’t broken – it’s working exactly as designed. And that’s the problem – the Island doesn’t need another election, it needs an awakening. Merry Christmas.
Ben Shenton is a senior investment director. He is a former Senator who held positions such as minister, chair of the Public Accounts Committee, and chair of Scrutiny. He also assists a number of local charities on an honorary basis.
