Guernsey’s finance sector, government and regulator have made a commitment to align their risk appetite in a bid to promote growth in the industry.
Guernsey Finance, the international promotional agency for the Island’s finance industry, held its annual industry update on Tuesday at St James, with nearly 300 attendees. As well as providing local industry with an overview of current activity, this year’s event included two panel debates on the level of risk appetite the Island is prepared to accept to win new business.
The event, titled ‘Risk v Reward – a growth strategy’, was moderated by Richard Digard, former Editor of the Guernsey Press and panellists included Deputy Kevin Stewart, the Commerce and Employment Minister and Cees Schrauwers, Chairman of the Commissioners of the Guernsey Financial Services Commission (GFSC).
Fiona Le Poidevin, Chief Executive of Guernsey Finance, said: “Guernsey has a very strong proposition as an international finance centre but the Island does face a number of challenges and so we need to ensure that we are well placed to continue to grow. If you want the returns you’ve got to be prepared to take some risks, but how much risk is acceptable and has Guernsey got its risk appetite right? Our panels were put together to discuss the level of risk that the Island is prepared to accept in securing new business and how this sits within the strategy for the Island’s financial services sector. The key takeaway from the debate is that we have a commitment from the finance sector, government and the regulator to align their risk appetite. There was a clear understanding that we don’t want to do anything which threatens our reputation but equally we can’t be completely risk averse otherwise there will be no reward.
“Within regulation, for example, we need to meet international standards on financial crime but there are also times when we don’t need to ‘gold plate’ our regime but instead adopt risk-based principles so that we retain flexibility for innovation and meeting new challenges. This has been best illustrated by our approach to AIFMD [the Alternative Investment Fund Managers Directive] where practitioners, government and the regulator came together to create a solution which is now working well in meeting the needs of our industry and its client base. These themes will no doubt be developed further through the Commerce and Employment Department’s twenty-first century regulation paper, which Deputy Stewart said will be issued shortly.”
The first panel session looked at risk and the future of the finance industry, determining the key requirements for the sector to prosper, with panellists including Nick Vermeulen from PwC, Mark Huntley from Heritage, Chris Le Conte from Robus, Andreas Tautscher from Deutsche Bank and Paul Hodgson from Butterfield Trust.
The second panel then responded to the first by discussing how well-aligned government, regulatory and other key stakeholder strategies were with industry’s aims. Panellists were Deputy Stewart, Mr Schrauwers, Peter Mills, Chairman of the Guernsey International Business Association (GIBA) and Jon Moulton, Chairman of Aurigny.
Miss Le Poidevin added: “The panels also noted that growth can only be fostered by having the right infrastructure. This includes the capacity to create or update legislation in a timely fashion and it was pleasing to hear that Deputy Stewart is making progress on securing additional funding for his Department to help develop new products and services. There was also discussion that perception might be different to reality in relation to housing licences and in fact the Housing Department is open to working more closely with businesses regarding applications but it needs to be a two-way process. Industry also made a commitment to not just carry on investing in local staff but to do a better job in educating our young people about the sector and the opportunities it offers.
“Unsurprisingly, air links were also raised as vital for our future as an international finance centre. There were some concerns raised about the monopoly position of Aurigny and the impact this has on prices when you need to travel at short notice, as well as the importance of reliability. However, there was overall consensus that the States buying the airline in the first place was the right decision to secure our lifeline route to Gatwick, that the purchase of the jet has been well received especially with off-island clients and that the new route to London City is a huge boost for business. However, it was once again questioned whether Aurigny should be run as a profit centre or whether it should be strategically subsidised, for example, to experiment with new routes to hubs in Europe such as Paris, Amsterdam or Frankfurt.”
The event opened with an introduction from Jim Gilligan, Chairman of Guernsey Finance. He was then followed by Miss Le Poidevin who provided a Guernsey Finance activity update before Mr Digard moderated the two panel sessions. Mr Gilligan provided a conclusion to the event.