The island's aggressive approach to marketing its financial services does not always impress its rivals, according to Richard Newell. Richard Newell is the editor of International Money Marketing.
The Channel Islands are always fiercely defensive of their traditions and status. In the current environment of uncertainty brought about by the UK government's review and its plans to legislate on anti-avoidance, the financial sector is once again anxious to put a positive spin on things.
Guernsey's financial services division has a particularly pro-active approach to the development of its product portfolio.
In some cases, one senses that its local rivals might actually feel it oversteps the mark. The recent announcement of a planned Channel Islands stock exchange is a prime example.
The initiative for the exchange has come from Guernsey, and Guernsey alone, it seems. The proposal suggests the exchange would offer another reason for fund groups to base their funds in Guernsey and allow the island to rival Dublin as a funds domicile, listing and administration centre.
Officials in Jersey were distinctly underwhelmed by this proposal, to the extent that they were anxious to make clear that the idea had nothing at all to do with them.
Guernsey has already developed a niche for itself as a funds administration centre, although it is hampered from further expansion by a perception that it is more expensive than rival centres, particularly Dublin.
This is especially true in the area of staffing. Guernsey does not have the seemingly infinite pool of labour that Dublin has, and this is one of the problems it faces in its attempts to build for the future.
The efforts of the Guernsey Financial Services Commission are a reflection of the concern that all centres have, of not being too reliant on a small number of specialisations.
The key areas of operation are banking, fund management, insurance (mainly captives but including life companies such as Generali and Royal & Sun Alliance), and trust services. Within these, the various divisions of the Financial Services Commission have been developing and updating regulations on funds, and structures such as protected cell companies.
The recent UK Budget will have done nothing to calm the islands' fears that any threat posed by the ongoing review of offshore centres is benign.
A clampdown on offshore trusts is likely to result in the repatriation of a lot of UK assets, an action forced on investors by the closure of a number of loopholes for settlors and beneficiaries. And the promised anti-avoidance legislation, designed to recoup at least £1.5bn for the UK Exchequer, is also an unknown quantity. Will they go for the billions of undeclared deposits in the offshore centres? Or will they will target non-domiciles who remit offshore assets to the UK?
Guernsey has been left in no doubt that the latest changes being forced on it are some of the most revolutionary since the lifting of exchange controls almost 20 years ago.
Deposits with Guernsey banks total almost £50bn. During 1997, these rose by just over £6bn, equivalent to a rise of 13 per cent, the largest annual increase since 1992. The currency breakdown of deposits in Guernsey is one-third sterling, two-thirds foreign currency, mainly dollars, German marks and Swiss francs.
But Guernsey is putting a lot of store by the continued development of its trusts business and, while the UK may represent a diminishing return, the wider international market is where it sees great promise.
Industry players agree the trusts industry will provide Guernsey's competitive edge in the future and they expect business from Europe to increase over the next few years.
Growth is expected to be driven by those who have accumulated wealth as a result of increasing prosperity in various parts of the world.
The perception with regard to Europe is that as economic and monetary union becomes more of a focus, there will be an increasing demand for an offshore centre close to, although outside, Europe.
As such, the Channel Islands are in a fairly unique position. The Treaty of Rome allows Guernsey to participate on the fringes of the EU without being drawn into the bureaucracy of Brussels. By the same token, both Guernsey and Jersey are increasingly marketing themselves as a base for funds and insurance product promoters who want to target a small number of European countries and are not inclined to use the single passport of Ucits or Third life Directive certification. In addition, some EU regulators are concerned that the Investment Services Directive encourages regulatory arbitrage.