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It’s taking too long for businesses to open bank accounts, compounded by the fact many have had their services denied with no statutory requirement to guarantee basic financial services to individuals and companies in the island.
The situation is visible to those who deal with the back-office and administrative tasks, but it is the escalation of a disparity in service between not just Guernsey and the UK but our closest smaller competitors.
So, what’s being done, and who needs to act?
Listen: Diane de Garis and Tim Chilestone sit down to discuss the state of business banking in Guernsey.
Economic Development is the responsible States departments for overseeing the banking sector and it says it's aware of the recent issues blighting businesses.
The Committee says it is reviewing the banking sector with a view to increasing the number of locally licensed banks, improving the experience of opening accounts and individual’s’ access to credit cards.
IT upgrades to the Guernsey Registry, the local equivalent of Companies House, should allow third parties to access information to speed up checks to access banking services, though this may come at a cost to firms.
Home Affairs is also said to be considering changes to the electoral roll prior to the upcoming 2025 general election so credit agencies can access data before issuing domestic credit cards.
Firm policy proposals could come forward because of the investigations.
Reacting to this on the latest Express podcast, Diane de Garis, President of the Chamber of Commerce, said introducing new banks to the market would be positive but said it would be difficult to achieve “unless there's a queue of good banks requesting local licences”.
She named Butterfield Bank as one lender that is looking to expand its local offering through bespoke products including a business saving account and investigating a credit card.
“There's a real intent to offer a proper local service as a local bank. So there's definitely some hope, and it's great talking that way and we've met with them many times.”
Pictured: Diane de Garis.
But Tim Chilestone, Director of local bookkeepers TCS, cast doubt over whether demand exists from external lenders to set up shop in Guernsey.
“There isn't a queue of banks as far as I know that like are like ‘can we open in Guernsey?’,” he said.
He did welcome the announcement from Economic Development but wants to see real action over the coming years, such as government trying to convince banks to reevaluate the Guernsey marketplace.
This would also push existing local lenders to up their game and provide a better service.
“Give them more competition by trying to attract other banks,” Mr Chilestone said. “There are some really excellent business banks. The challenger banks like Starling, Monzo, and tide, and about 20 others. Also, some of the older high street banks.
“There's many, many, many licensed retail bankers in the UK that we should be trying to attract.”
Pictured: Tim Chilestone.
Failing that, he suggested a service involving the post office which is being successfully used in the UK but noted that demand for a sub-scale market like Guernsey is the blockage. It’s not the “ideal solution” in his eyes but should be explored if nothing else proves fruitful.
“A Girobank was a thing that existed in the UK, it was set up by the by the post office to enable small businesses to access banking services. The reason why the post office generally works quite well with banking services is they already have the ability to handle large volumes of cash,” Mr Chilestone said.
“Guernsey Post process all of the transactions for your Co-op dividends. That is really not that different from just money in and out of a bank account.
“If we are we still sitting here in two years time with the same problems, or the problem has got any worse, we need to be looking at an alternative.
“Business accounts let's not forget are not free. You pay money to operate a business account. That could even be a revenue stream for Guernsey Post.”
Ms de Garis said this could also guarantee a bank counter service in the face of bank branch closures, which is delivered by the UK post office and Starling bank. Discussions have taken place in Guernsey, but issues have already been encountered.
“Guernsey Post have said to me that they'd be absolutely willing to work with Starling. But of course, we've kind of got the barrier of size. We're not the first door that Starling is knocking on to grow their client base or their offering.”
Pictured: Could Guernsey Post be part of the solution?
Ms de Garis expects the issues are also affecting Jersey businesses as banks which have withdrawn services from Guernsey firms did so on the basis of regulation in the sister isle.
But she accepted that there is more choice in the marketplace there, which may explain why they had heard less anecdotal evidence mirroring the Sarnia experience.
Mr Chilestone agreed: “Clearly, we all need to do more because we're a long way off being where we need to be tohave a level playing field with our close neighbours.
“The reason they're not seeing these issues is they have Santander who seem to be way better than all of our banks at dealing with these issues.
“Santander, I'm aware has been looking to open a branch in Guernsey for quite some time, but for whatever reason, they haven't achieved it yet."
Mr Chilestone also called for a “basic banking law” to ensure a minimum level of serve to both individuals and businesses – something which was passed by the UK parliament “many years ago".
“The very basic idea is you have a bank account in your name, you can pay money into it, you can withdraw money from it, you get a debit card."
Some people are restricted from additional services, for example due to previous criminal activity, but everyone is guaranteed a bank account.
Guernsey has no such law. Those who are unable to access basic financial services which are essential in the modern world have to resort to using a charity – Guernsey Community Savings – just to be able to receive and send cash digitally.
“What you're also doing by excluding these people from banking is you're opening people up to being the victim of financial fraud…maybe I'll use a relative's bank account, or a friend. What if that person then decides they're just going to take all my money?
“It'd be very difficult for me to have any recourse to them. So you're opening people up to financial victimisation and coercion and control as well. This is a much wider issue… it is that bad, and it can have really far reaching serious consequences.”
Ms de Garis said she was shocked at discovering the extent of personal banking issues on top of business woes: “I would like us to ensure that there is a certain level of service so that we don't have the need for charities like this, and businesses also get a fair service that would be available elsewhere."
Anyone experiencing business banking trouble has been urged to complete the Chamber of Commerce’s survey to see if issues exist across the board.
LISTEN: Banking pains for business laid bare
Economic Development looking to improve banking for business and consumers
Chamber alarmed at banking access for non-finance businesses
OPINION: Current marketplace is "stifling economic growth" in Guernsey
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