Jersey Finance chief executive Geoff Cook talks to Sarah Godfrey about the growing sophistication of the offshore industry and how Jersey shapes up to the challenges of the the present and the future
It is fair to say the world has become a more sophisticated place over the past 30 years. In 1979, when Jersey Finance chief executive Geoff Cook was starting out in financial services, most people still thought - in the words of Douglas Adams - that digital watches were a pretty neat idea.
As far as finance went, in the UK banks were for deposits and lending, while stockbrokers managed investments. Even IFAs were a thing of the future, to say nothing of the kind of electronic financial shenanigans that recently lost Societe Generale £3.7bn.
Likewise, while offshore centres like Jersey started out simply as deposit points for the internationally mobile or those from politically unstable areas, they now offer a far bigger range of services to a significantly wider audience.
"I think offshore centres have increasingly become conduits for capital and structuring centres," says Cook.
"One of the biggest changes is the range and choice of vehicles, products and services available. That has come about to an extent through the internet and greater access to information, and through internationalisation, driven by globalisation. Global mobility has been the feature with the most impact in the last 10 years."
While 30 years ago people did not tend to have homes and business interests in two or three countries, these days it is very common for people to spend part of their career abroad. Last year, says Cook, a record 355,000 people left the UK to work or retire abroad. This level of mobility is not unique to the UK and is a major factor behind the growth of offshore centres.
"If you look around the world you will find that in all the major conurbations there is an offshore centre nearby," he says. "The US has Bermuda and the Cayman Islands; Asia has Singapore and Hong Kong; Europe has the Channel Islands and the Isle of Man."
The role of these offshore centres has evolved over the past decade or so, says Cook. "About a decade ago I would have said their appeal was not that wide, but it has transformed in the last five or 10 years. Take the depositor base as a proxy: we have £200bn of deposits and it started as British expatriates parking their savings. Now two-thirds of our deposits are non-sterling. We have investors from over 200 countries - it has become very diversified and global."
And although Dublin and Luxembourg, as members of the European Union, have become the domicile of choice for many mainstream offshore funds in Europe, this has not been a fatal blow to Jersey's fund business.
"In Jersey at the end of 2007, funds under management exceeded deposits for the first time," Cook explains.
"People's level of financial education and sophistication has increased to an extent where they are prepared to hold a raft of different products. Also in the last five or 10 years we have seen the rise of alternative investing, with retail investors gaining access to what were previously institutional investments such as hedge funds, funds of funds, private equity and so on, moving away from the traditional cash, fixed interest and equities."
Cook says being outside the EU has been more a help than a hindrance to Jersey, as it is not hamstrung by the bureaucracy that comes with being part of a large trading bloc. Uncluttered regulation means products can be faster to market - indeed, under the Jersey expert funds regime, providers can take a fund from concept through approval to launch in 72 hours - though some investors might feel a little more time for reflection would be a good thing.
"The fact we can be nimble and streamlined and less constrained is very positive, and being outside the EU also allows us to maintain our tax neutrality," he says. "It is attractive to businesses that want to set up in Europe - for example, many Indian firms are looking to expand outside India and a couple of businesses have chosen Jersey as their bridgehead into Europe and the West. We can offer a business-friendly government, streamlined regulation and a relatively benign tax environment, yet we are in the same time zone as Europe and we are recognised as an equivalent third country because of our standards of regulation and compliance."
Cook's role as chief executive of Jersey Finance sees him travelling the world to represent the interests of his organisation's 170 member companies, drawn from every walk of financial life. In 2007 he visited three continents and nine countries, although he also finds time to work with the authorities closer to home.
"We are seeking to ensure we have the best business environment for people to prosper, and I spend a lot of time with companies, the government and the regulator," he says. "I also work with community groups to engage and encourage young people to come in to the industry, to ensure that we have the right proportion of local resources and so on."
Indeed, a small island base comes with both benefits and downsides. Jersey - as with other small but powerful financial centres like Luxembourg and Bermuda - undoubtedly punches above its weight. It is currently fourth in the world for GDP per head of population, according to the CIA World Factbook. (The US is ninth and the UK 28th.)
From its beginnings as a useful outpost for British expats, Jersey has grown into a multi-faceted jurisdiction looking after total wealth of £400-500bn, over £200bn each of deposits and funds under management on the island, and also investments it manages elsewhere in the world. "I read the other day that the disposable wealth of the Indian population is $1trn - that's about the same as the £500bn we hold, and we are an island nine by five miles across with a population of 89,000 people," Cook comments.
But with such a small population to draw on, it is vital to engage the island's young in the industry.
"Like every business or enterprise, resources are always an issue, and like many mature economies, that centres on the supply of skills and human resources," says Cook. "We are in the fortunate position of having a very good education system, with a high proportion of students getting good exam grades and a high proportion going on to higher education and getting degrees. About half of those who go off to university come back to the island and half don't, so it would be helpful if a few more came back."
Although he has been in post at Jersey Finance for only a year, Cook worked in Jersey for several years in his former life at HSBC, and is a big fan of island life. "Working with customers and clients of practically every nation, culture and geography is hugely varied and interesting and stimulating, yet at the end of the day you are only 15 minutes from home and some of the world's most beautiful scenery," he says.
But for all its beaches, green fields and wooded valleys, Jersey is no tax haven, Cook argues. "We operate on as high if not higher standards as anywhere in the world on financial crime and we are no friend of the tax dodger - we don't want clients evading their legitimate tax liabilities. The drive to lift international standards of compliance and counter undesirables is positive, and Jersey has embraced it."
Succeeding co-founder Simon Rogerson
Janus Henderson Global Dividend Index
More than 10 million shares allocated
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