Jersey Bank Accounts

Andrew Coyne reports on why Jersey is confident it can overcome threats to its future

It is sometimes said that when people become rich and money is no longer a concern they start worrying about their health. Whether the human condition needs something to worry about or not is a matter of conjecture. What is more certain is that Jersey as a finance centre has not had a period over the last few years where there hasn’t been a nagging uncertainty in the background.

First it was the Edwards Report - the UK government-commissioned audit into the regulations and practices of the UK sterling area offshore centres which came up with a number of recommendations.

Then came an attack from the OECD - the Organisation for Economic Co-operation and Development - on what it saw as harmful tax competition because of the fiscal advantages offered by centres such as Jersey.

And then came news that a planned withholding tax on saving income within the European Union was threatening to engulf the Channel Islands and the Isle of Man, as well - or at least if EU centres such as Luxembourg had their way.

Jersey Bank Accounts & The Edwards Report

With hindsight, the Edwards Report - attacked as the UK government riding roughshod over the independence of the sterling centre offshore islands before the review was carried out - is now being seen as something which was to the island’s benefit. Edwards, a former UK Treasury official, was largely complimentary about Jersey’s financial regulations and practices and, to a certain extent, the island has been able to use this as a marketing tool.

However, Edwards did have some criticisms - he suggested there was a need for an offshore ombudsman, that a deposit compensation scheme such as the one that exists in the Isle of Man should be considered, and he said there was a general need to tighten up the regulation of trusts and companies. ©

To its credit, Jersey has acted on many of Edwards’ recommendations. A consultation paper has already been sent out to the industry asking for comments about the possibility of a compensation scheme for depositors and a new trust regime has become law (see the information panel on page 46).

Jersey Bank Accounts - Edwards Suggestions

Another of Edwards’ suggestions was that there should be greater co-operation between industry and government and the formation of the Jersey Finance Industry Association (JFIA) should help to facilitate such co-operation. Made up of bankers, lawyers and accountants, it is intended to be the senior body representing the island’s finance industry and it will have a close relationship with the Financial Services Commission, in particular, and the Jersey government in general.

What is irritating to both the island’s professionals and its authorities, however, is the fact it is receiving mixed signals from world bodies about its status as a financial centre. Praise from Edwards and from a new Financial Stability Forum Report (see the information panel below) have to be balanced against the ongoing campaign by the OECD against offshore centres.

At the time of writing, a report in The Times newspaper suggested that Jersey was set to defy the OECD over regulatory and disclosure standards and may as a result be ‘outed’ by the OECD as an ‘unco-operative’ tax haven.

The report goes on to say that Jersey and the Isle of Man, which has taken a similar stance, could face punitive sanctions if they continue to resist worldwide moves to clamp down on tax avoidance. Such measures could include OECD countries revoking double tax treaties with the centres.

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