BL Magazine Issue 57 July/August 2018 by BL Magazine

BUSINESSLIFE

ISSUE 57 JULY/AUGUST 2018

AIFMD • female private clients disinheritance • philanthropy infrastructure funds • mark boleat open banking • confirmation bias investing • business resilience

BUSINESSLIFE

ISSUE 57 JULY/AUGUST 2018

Should your business dump social media?

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Welcome

To be or not to be social I’M PROBABLY NOT alone in having a love/hate relationship with social media. I love the fact that you can keep up to date with the latest breaking news, find out what your friends are up to, and follow people, both in business and other worlds, who you find interesting/ funny/controversial. On the hate side – well, there’s the trolling; the venom that’s directed at people; the fact that it creates an ‘echo chamber’; the people who post endlessly about absolutely everything they do; the racism, sexism, xenophobia, homophobia, transphobia and all forms of hate speech; the people who see a post and then repost/retweet it without fact checking. And of course, there’s the fact that social media now seems to be having a distinct impact on the democratic process – which is probably scariest of all. OK, so I actually hate social media far more than I love it. And I think I’m not alone. I do believe that people are starting to wise up to the worrying side of social – with the whole Facebook and Cambridge Analytica scandal shining a very bright light on its dark underbelly. Of course, that’s not likely to stop people from being glued to social every hour of every day. More recently, there have been a couple of news stories that caught my eye. First, there was the pub chain Wetherspoons deciding to get rid of all its social media channels. A bold move in an era when having a social presence as a business seems to be mandatory. Second was a study from the Pew Research Centre, which examined how US teens between 13 and 17 use social media. It found that the most popular channels were YouTube, Instagram and Snapchat – Facebook and Twitter were left trailing behind. All of this led to the cover article in this issue and the question of whether business should dump social media altogether. And if not, should firms, at the very least, be more strategic in the channels they use? It’s a thought-provoking read. Elsewhere in this issue, we take a look at the Alternative Investment Fund Managers Directive (AIFMD). I’ve been editing this

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magazine for over nine years now – having launched it on the back of the financial crisis. Since then, we’ve covered a whole host of legislation that’s been brought in on the back of that crisis, including FATCA, UK FATCA, CRS and AIFMD. And then there’s the other stuff, such as GDPR, which the Channel Islands have also had to contend with. On each occasion, there’s been a level of moderate hysteria in the islands about the potential impact of every piece of legislation – how complex it is, the cost of introducing it, administering it and so on. And every time, once the legislation is introduced, the impact never seems to be as big as expected. With AIFMD having recently passed its fifth anniversary, we thought it might be timely to look at exactly how the islands have been affected. It came as no surprise that the reality was considerably less dramatic than the anticipation. Our interview in this issue goes off-island and into the City. It’s unusual for us to do this, and the vast majority of our interviewees in all 57 editions of the magazine have come from either Guernsey or Jersey. But there are times when we have the opportunity to interview someone who sees both the islands’ and the UK perspective. Born and bred in Jersey, Mark Boleat was, until recently, the political leader of the City of London. As such, he has extensive firsthand experience of the relationship between the two and gives us his take on the strengths and weaknesses of that relationship. And he doesn’t hold back. It’s hard to believe that with this issue we’re already headed into the second half of 2018 – this year seems to be flying by. On a lighter note, if you’re picking up this issue of Businesslife as you head off for a bit of summer sun, then make sure you check out this issue’s lifestyle section, the Agenda, with all its tips on how to carry off a chic Riviera look! Enjoy your read and see you once the holidays are over. n

people are starting to wise up to the worrying side of social – with the Cambridge Analytica scandal shining a very bright light on its dark underbelly

Nick Kirby, Editor-in-Chief, Businesslife

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Combined strength. The Private Clients team in Jersey is committed to providing a personalised service that is tailored to each individual client, taking the time to understand what is important to our clients and providing intelligent solutions. Our Client Advisors have access to global UBS resources and ensure that every client receives the best possible wealth management advice. Michael Clarke, Head of Private Clients UBS AG, Jersey Branch 1, IFC St Helier, Jersey JE2 3BX 01534 701148 michael.clarke@ubs.com

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Contents

INSIDE 14 bl guernsey

The latest financial and business news and views from the bailiwick

43 48

BUSINESSLIFE

Businesslife is published six times a year by Chameleon Group +44 1534 615886 www.blglobal.co.uk

7 News

40 infrastructure

55 investing

A round-up of the latest Channel Island business news

How Guernsey and Jersey are helping raise funds for major infrastructure projects around the world

Why do so many investors jump onto the ‘next big thing’ when they know it doesn’t make investment sense?

43 disinheritance

59 business resilience

People can write their spouses and children out of their wills for all sorts of reasons – and often there’s little that can be done about it

Businesses are arguably facing more varied threats than ever before – and not planning ahead could have catastrophic results

48 philanthropy

62 social media

The number of high-net-worth people looking to make a difference is rising – and the Channel Islands are helping make it happen

Wetherspoons led the way by dumping social media – should your business do the same?

12 Appointments CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk EDITOR-IN-CHIEF Nick Kirby nick.kirby@blglobal.co.uk ART DIRECTOR Angela Lyons SUB EDITOR Kate Wheal ADVERTISING sales@blglobal.co.uk NEWS AND EDITORIAL news@blglobal.co.uk GENERAL ENQUIRIES enquiries@blglobal.co.uk

Recent top-level appointments at firms in Guernsey and Jersey

24 Interview Mark Boleat, former political leader of the City of London, puts forth his opinions on the Channel Islands

30 female advisers Do female private wealth clients prefer to work with female advisers, or do they just want the best person for the job?

34 aifmd Five years since launch, has the impact of AIFMD been as bad as expected?

52 open banking It might signal a brave new world, but exactly what is Open Banking all about?

65 confirmation bias We’d like to believe that we’re level-headed and make decisions based on logic and reason, but our brains often have a mind of their own

18 bl Jersey Disability law and a review of business developments and finance news

69 The Agenda Get your sunglasses and Kir Royales at the ready as our lifestyle section heads to the Riviera!

contributors The BL Global Discussion Forum

EMMA DE VITA

Follow us @blglobalnews Office: Meadowlands, La Rue a la Dame, St Saviour, Jersey JE2 7NQ © Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

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Business writer Emma examines the growing number of wealthy women and questions whether they prefer to work with female advisers, and what that means for the private wealth industry.

CHRIS MENON

It’s good news all round for Chris. First, he looks at how the Channel Islands are helping philanthropists around the world, and then digs into how Open Banking might benefit personal and business customers.

DAVE WALLER

It’s a triple-header for Businesslife stalwart Dave, as he examines how businesses need to be more resilient than ever, gets to grips with confirmation bias, and asks whether social media is a waste of time.

RICHARD WILLSHER

It’s great to have Richard on board for this issue, because he makes sense of the stuff that leaves the rest of us blank with incomprehension – this time it’s AIFMD and whether it turned out as bad as people predicted.

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Exceptional Performance Walkers provides practical and commercial legal advice to our international client base which includes global corporations, financial institutions, investment fund managers and high net worth individuals. Advising on the laws of Jersey, Guernsey, the Cayman Islands, Bermuda, the British Virgin Islands and Ireland, from our global network of offices, Walkers has the expertise to deliver every time. Walker House 28-34 Hill Street, St. Helier Jersey JE4 8PN, Channel Islands T +44 (0)1534 700 700 F +44 (0)1534 700 800 E jonathan.heaney@walkersglobal.com

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in the NEWS Follow us @blglobalnews

Jersey publishes Brexit settlement scheme

THE GOVERNMENT OF Jersey has set out details of a scheme, which will operate from the end of this year, where EU citizens living in the island can register for ‘settled status’, allowing them to continue living and working in Jersey after Brexit. This follows an announcement by UK Immigration Secretary Caroline Nokes in June of a Statement of Intent for the UK’s EU Settlement Scheme. Jersey has been working to produce an aligned scheme, known as the Jersey EU Settlement Scheme. EU citizens resident in Jersey will be able to apply to the Jersey scheme via a simple online process. The Minister for External Relations, Senator Ian Gorst, who has overall responsibility for Jersey’s Brexit preparations, commented: “The government continues to recognise the important contribution made by EU nationals to island life. We can assure EU citizens living here that they will be able to apply to remain in the island

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by taking advantage of the Jersey EU Settlement Scheme.” Deputy Gregory Guida, the Assistant Minister for Home Affairs, added: “The scheme that we are proposing will reflect that offered by the UK, allowing EU citizens who have lived in Jersey continuously for five years to apply for settled status. Those who have not yet lived in the island for five years will also be able to apply, for ‘pre-settled’ status, gaining settled status when the full five years have elapsed. “We are also working closely with the UK government to finalise the approach to time spent in Jersey in respect of eligibility for settled status in the UK and vice versa.” Information on how the scheme will operate, including case studies to help EU citizens understand the application process, is available at www.gov.je/brexit. Further information will be added as it becomes available. n

European VC investment hits 10-year high EUROPEAN VENTURE CAPITAL investment reached its highest level in a decade, with €6.4bn in 2017, according to the latest figures from Invest Europe. Venture capital funds in Europe increased investments into companies of all stages and sizes last year. Seed and early-stage investments grew almost 50 per cent yearon-year, reaching €649 million and €3.5bn respectively, Invest Europe’s 2017 activity data report reveals. Meanwhile, laterstage investments into larger companies reached €2.3bn – the highest level since 2008. The information and communications technology sector received 45 per cent of the total investment, followed by biotech and healthcare (23 per cent) and consumer goods and services (eight per cent). For the first time in 2017, European venture funds raised on average almost €100 million at final closing, almost double the average of 10 years ago. Invest Europe data also reveals that European venture capital raised €7.7bn in 2017, close to 2016’s record €8.2bn fundraising year. Almost 1,200 companies were exited by VC funds last year, with a 60 per cent yearon-year increase in VC-backed companies going public. n

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News

Top trust company listings published EPRIVATECLIENT, THE ONLINE publication for private client professionals, has released its 2018 Top Trust Companies list, which features several Channel Island-based operators. Introduced nine years ago, the list surveys 100 trust companies across the UK and Crown Dependencies to determine the major fiduciary service providers for private clients. The rankings are based on data for areas such as number of client-facing directors, number of client-facing trust officers/ managers, total number of staff and fee income. The 2018 list ranks 36 firms in three tiers, based on reputation, quality of service and how the firms have fared in the past 12 months. Channel Islandsbased firms listed include: Tier 1: Equiom; Estera; First Names Group; Intertrust; JTC Group; Rawlinson & Hunter; RBC Trust Company (International); Saffery Champness Registered Fiduciaries; Vistra; and Zedra. Tier 2: Butterfield Trust; Hawksford; Highvern Trustees; Minerva Trust; Ocorian; PraxisIFM; Sanne Group; Stonehage Fleming; and VG. Tier 3: Accuro; Fairway Group; Knox House Trust; Nerine Fiduciaries; Rothschild Trust; and Trust Corporation International. n

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Done Deals Lawyers from Bedell Cristin have advised Comcast Corporation on the Jersey regulatory aspects of its bid for Sky, including a successful application for merger approval from the Jersey Competition and Regulatory Authority. Comcast Corporation is a global media and technology company with two primary businesses – Comcast Cable and NBCUniversal. Sky, one of Europe’s leading entertainment companies, serves 23 million customers in seven countries. The Bedell Cristin team worked alongside Freshfields, Comcast’s onshore counsel, and was led by Guy Westmacott, Managing Associate, overseen by Martin Paul, Partner, and supported by Natasha Bairstow, Associate. Carey Olsen’s corporate team in Guernsey has advised Inflexion Private Equity Partners on the establishment of two new funds, Inflexion Buyout Fund V and Inflexion Partnership Capital Fund II, securing commitments of £1.25bn and £1bn respectively. Both funds were oversubscribed and reached their respective hard caps within just four months of launch, after receiving strong support from existing investors and attracting new investors from the US, Europe and Asia. Led by Partner Andrew Boyce and Senior Associate John Scanlan, Carey Olsen worked alongside onshore legal adviser Ashurst to advise longstanding client Inflexion on the formation of both Guernsey-domiciled funds. Collas Crill has acted alongside Hogan Lovells for TH Real Estate in connection with a £155 million facility for the acquisition and development of 80 Fenchurch Street, prime office property in East London. Acquired by Partners Group, the 14-storey building will comprise 250,272 sq ft net internal area split between Grade A office accommodation and retail space. Developed by YardNine, the project will also feature six landscaped roof terraces. The deal was led by Group Partner Paul Wilkes, assisted by Senior Associate Tristan Ozanne and Associate Michael Lyner. Mourant Ozannes’ Guernsey corporate team has advised Raksha Energy Holdings on its successful takeover of AIM-listed Guernsey company Mytrah Energy, in a transaction that values the latter at £78.9 million. Mytrah is a large independent power producer in the Indian renewable energy sector, which has been listed on the AIM market of the London Stock Exchange since 2010. The company has a portfolio of 1,743MW of installed and underconstruction renewable power projects across nine Indian states, and one of the largest wind

data banks in India. Mourant LP Partner John Rochester led the team advising Raksha, assisted by Counsel Alex Davies and Associate Alana Nisbet. An Ogier team led by Global Head of Corporate Simon Dinning has advised UBM on its £3.9bn purchase by Informa – a transaction that brings together two leading business-to-business events organisers. Ogier advised on the Jersey law aspects of the proposed deal, which was conducted by way of a Jersey scheme of arrangement. Simon Dinning was assisted by Managing Associate Alexander Curry, Senior Associate Kevin Grove and Associate Chloe Watson-Hill on the corporate side, with Partners Nick Williams and Oliver Passmore and Senior Associate James Angus from the dispute resolution team. They worked with Linklaters, as English Counsel. Pinel Advocates has advised Jersey-based Predator Oil & Gas Holdings on its successful listing on the Main Market of the London Stock Exchange. Pinel Advocates’ team was led by Andrew Pinel and David Yetman. Predator Oil & Gas Holdings has been exploring and developing oil and gas assets worldwide, including in Trinidad and offshore Ireland. Charles Russell Speechlys were the English legal advisers to Predator Oil & Gas Holdings. Voisin has acted as legal counsel in connection with the issuance of collateralised loan obligation (CLO) refinancing notes. Saranac CLO III and Saranac CLO III issued just over $363 million of refinancing notes. The notes, which are rated by Moody’s Investors Service, are collateralised primarily by a portfolio of senior secured syndicated corporate loans. Associate Howard O’Toole led the Voisin structured finance and capital markets team. Voisin acted alongside Seward & Kissel, Allen & Overy and Nixon Peabody. Jersey-based firms VG and Ward Yates acted in partnership with the Dubai office of Dentons to advise Virgin Mobile Middle East and Africa (VMMEA) on the issuance of a US$30 million pre-IPO exchangeable senior secured Sukuk, which was privately placed. The company plans to use the proceeds to fund growth and expansion. Ward Yates advised as Jersey and BVI counsel, while VG acted as corporate services provider to the special purpose vehicle issuer. Arqaam Capital acted as the lead arranger and book runner, while BNY Mellon acted as the delegate and Minhaj Advisory acted as the Shariah adviser. n

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News

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News

JT publishes 2017 Annual review

JT HAS PUBLISHED its Annual Review for 2017, which shows an increase in turnover of 41 per cent from £185 million to £261 million, creating an operating profit for the year of a little over £11 million. The group attributes the increase in turnover to growth in its international business – it has signed up more than 1,600,000 mobile devices around the world, which connect equipment ranging from heart monitors to payment systems, smart traffic lights, solar farms and livestock trackers. Some 70 per cent of JT’s revenue now comes from outside of Jersey – which supports JT’s investment in local infrastructure, such as its 4G and island-wide full-fibre networks. During 2017, JT says it connected another 11,000 broadband customers to the full-fibre network, reaching a total of 38,700, with the remaining customers expected to be connected by the summer. JT Chairman Phil Male commented: “Due to Jersey’s manageable size, existing mast network and diversity of terrain, we are fast becoming an ideal ‘sandbox’ for innovation – global giant Sony has recently chosen the island and JT to test its technology.” n

Osiris rebrands as Fiduchi JERSEY-BASED MULTI-FAMILY office, trust, corporate and yacht services provider Osiris Management Services has rebranded itself as Fiduchi. Managing Director David Hopkins explained: “As part of our strategic review, we set clear goals for our future growth. To achieve this, we identified that we needed to change our name to something more suitable for other jurisdictions and to support our plans.” He added that the new name brought together the words ‘fiduciary’ and its Latin derivative ‘fiducia’ with ‘chi’, a Chinese term referring to a person’s life force or energy. Hopkins said the rebrand was part of a wider transformation at Fiduchi, including the decision to bring its sister company, Jersey Yacht Management, under the new brand. n

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MERGERS AND ACQUISITIONS Two Guernsey corporate governance and regulatory compliance service providers, Active Group and Optimus Group, are to merge. Active Founder Wayne Bulpitt and Optimus Founder Peter Mills will be joint Chairmen of the enlarged group. Active Group, founded in 2002, provides business support services including compliance and risk management, licensee management, family office support, business incubation and corporate services across six jurisdictions, including Guernsey, Malta and the Isle of Man. Optimus Group has been providing consultancy services to a wide selection of businesses across the UK and Channel Islands since 2010. The merger is expected to go ahead at the beginning of July, subject to regulatory approval of change of control. Fund administrator Apex Group and private equity firm Genstar Capital have acquired Ipes, a Guernsey-headquartered provider of fund administration and other services to the private equity sector. Adding $165bn in assets under administration to Apex’s portfolio, the acquisition will bolster the group’s private equity capabilities and depositary services across Europe. Ipes has 265 staff across five European offices, works with 195 clients and provides administration and depositary oversight for 390 funds. With the successful closing of this acquisition, Apex employee numbers will reach almost 2,000 and its total assets being serviced will increase to around $535bn. Terms of the agreement are not disclosed. The transaction is subject to closing conditions, including regulatory approval, and is expected to be completed at the end of Q3 2018. Jersey-based corporate, private client and fund administration firm Hawksford has acquired People & Projects (P&P), strengthening its presence in Hong Kong and Singapore, and expanding its footprint across major cities in

China. Established in 2007, P&P is a corporate services provider with 140 employees operating out of 10 offices in Hong Kong, Singapore, Shanghai, Guangzhou, Beijing, Changshu, Shenzhen, Tokyo, Milan and Barcelona. It provides backoffice and outsourcing support to a blue-chip and SME international client base. The transaction takes Hawksford’s global headcount to more than 400, with 200 in Asia. P&P Partners Stefano Passarello, Dario Acconci and Giacomo Stoppa will become shareholders in Hawksford and continue in senior management roles to ensure continuity for P&P’s client base. SGG Group has acquired Lawson Conner, a London-based provider of regulatory infrastructure software and managed compliance services to the global investment industry. The acquisition strengthens SGG’s service offering to institutional clients through the provision of a complete suite of compliance and regulatory services. The transaction, subject to regulatory approval, is expected to be completed by August 2018. Lawson Conner’s technology platform uses regtech solutions to deliver end-to-end compliance and regulatory solutions to institutional clients, from establishing a compliance framework and providing regulatory reporting, to enabling the conduct of regulatory activities through its Financial Conduct Authority-regulated AIFM platform, among others. Trust, corporate and fund services specialist Zedra has acquired Quaestum Corporate Management, based in Malta, subject to regulatory approval. Independent fiduciary services firm Quaestum was founded in 2012. The firm will be merged into Zedra’s network of global jurisdictions – 13 including Jersey and Guernsey. Quaestum’s management remains on board, with Quaestum Managing Director Jan Stockhausen becoming Managing Director of Zedra Malta. n

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News

Appointments The Office of the Information Commissioner in Jersey has named Dr Jay Fedorak as Information Commissioner. He took up the post on 2 July. Dr Fedorak will be responsible for regulating compliance with Jersey’s data protection and freedom of information laws. He will also represent the island internationally on these matters. He has 25 years’ experience in administering freedom of information and data protection legislation in the public and private sectors. Dr Fedorak served as Deputy Commissioner of the Office of the Information and Privacy Commissioner in British Columbia, Canada, from 2012.

Guernsey-based airline Waves has appointed Gus Paterson as Chief Executive Officer for the aviation division. Gus has more than 18 years of operational and management experience in aviation. Most recently, he was Director of Civil Aviation for the Channel Islands, responsible for all aspects of safety and security regulation, including airports, airlines and air traffic control. Before that, he held a variety of roles at UK air traffic services provider NATS. In recent months, Gus has led the Office of the Committee for Education, Sport and Culture in Guernsey, overseeing changes in its management and structure.

Logicalis CI has appointed Claire LloydGottard as Channel Manager for European Markets. Based in Jersey, Claire will manage the marketing and sales channels for Logicalis Managed Security Services – a global network that identifies and counters online threats such as social engineering, phishing and ransomware. Claire will coordinate the European part of the network to support business development. She previously worked in Commercial Development at JT and most recently at Cable & Wireless as Regional Product Director, where she managed 15 countries and was based in the Caribbean.

Deloitte has promoted Alex Adam to Partner. In his new position, Alex will continue to lead the firm’s advisory services, developing its offering across the Channel Islands and further afield. He joined Deloitte’s Guernsey office in 2003 as an audit trainee and, after qualifying, he was promoted to Manager in Deloitte’s London office, focusing on due diligence for financial services deals in the transaction services team. Alex was then seconded to China to assist in developing the firm’s due diligence capabilities. After returning to Guernsey in 2009, he was promoted to Director in 2013.

Technology solutions provider C5 Alliance has promoted Antony Allen to Chief Operations Officer. He will lead and support the management team’s decisions and ensure that C5 is adequately resourced to improve services. Antony has more than 20 years’ experience in the IT industry. He moved to Jersey in 2011, having held technical and operational roles in the UK. He was Head of Service Delivery and Operations at IT services provider Itex before it was acquired by C5, where he progressed to Managing Director of IT Services, Jersey, and joined the C5 board.

Ashburton Investments has named Tony Wilshin as Managing Director of its international business headquarters in Jersey. Tony was made a Director of Ashburton (Jersey) in 2016. As Managing Director, he will be responsible for Ashburton’s international offering and driving growth. He brings over 27 years’ experience in the Jersey financial services sector to the role, specialising in operational efficiency and process streamlining. Prior to joining Ashburton, he held senior posts at two international wealth management firms on the island, UBS and Kleinwort Benson.

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Andy Jehan has been appointed as Chair of the Board of Jersey Business, succeeding Wendy Lambert. Andy has over 37 years’ experience working in projects, sales and operations for Jersey Post, and is a Director and Company Secretary at St George’s Preparatory School. He is also a member of the Chamber of Commerce Executive Council and Chair of the Transport and Tourism committee. Also joining the board as a Non-Executive Director is Jennifer Carnegie, Chief Operating Officer at Amicus. She is also a co-opted Director with the Channel Islands Cooperative Society and a Jersey Appointments Commissioner.

Intertrust has named Niall Husbands as Head of Private Wealth in Jersey. Niall has worked as HSBC’s Head of Wealth Management, Europe, in Paris, and Head of Wealth Management, MENA, in Dubai, before returning to Jersey to join Ogier in 2012. He moved to Elian (now Intertrust) in 2014 as a Director. In his new position, Niall will aim to expand Intertrust’s client base among wealthy families and high-net-worth individuals, in addition to his existing role on Intertrust’s board in Jersey and Director of Treasury and Investment Services. He will focus on the Middle East, working with the teams in Dubai and Abu Dhabi.

Oliver Quarmby has joined law firm Ogier’s Guernsey investment funds and private equity team as a Managing Associate. Oliver is an English Solicitor and a Member of the Chartered Institute for Securities and Investment. He joins Ogier having spent more than seven years with Carey Olsen as a Senior Associate. Oliver has experience working in-house and at a regulatory consultancy, as well as in private practice. He advises clients on equity fundraisings, flotations, the establishment of private equity funds, hedge funds, closed-end investment funds and financings, and capital call facilities.

Appleby has appointed Wendy Benjamin to the position of Managing Partner for the Jersey office. This is in addition to her existing roles as Partner and Local Practice Group Head of the Corporate team. It was announced last year that Wendy would also take on management responsibility for Appleby’s Guernsey office. She joined the law firm in 1999 and became a Partner in 2003. Prior to her move to the Channel Islands, Wendy was the Legal Adviser to the Registrar of Companies for England and Wales between 1995 and 1999. Prior to that, she was a Partner with Eversheds, where she trained and qualified.

Hawksford has appointed Danny Curran as a corporate Business Development Director. Danny has over 20 years’ experience in financial services, most recently in corporate finance and equity capital. Based in the UK, Danny will be responsible for developing UK, Europe and Asia business in Hawksford’s corporate services division. He previously worked at FTSE 250 financial services provider Equiniti, leading its business development team. He provided support for flotations on the London Stock Exchange, while leading business development campaigns to attract blue-chip clients.

The Jersey Chamber of Commerce has named Murray Norton as Chief Executive. Murray has run several Jersey businesses, including The Quai restaurant and Murray’s, and is Brand Ambassador and Sales Manager for Liberty Wharf Apartments. In his early career he was a radio presenter and producer for the BBC. Recently, having been elected as Deputy for St Brelade in 2014, Murray has been Assistant Minister for Economic Development, Tourism, Sport and Culture at the States of Jersey. Here he has overseen culture and heritage, trading standards, consumer affairs and the lottery.

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BL guernsey GFSC releases 2017 Annual Report

he Guernsey Financial Services Commission has published its 2017 annual report and financial statements. Among the themes explored in the report is ‘green finance’, including a regulatory initiative, known as the Guernsey Green Fund, which was to be launched at the time of going to press. In addition, the Commission has announced its intention to work with the global insurance industry to make it easier for insurance companies to invest in longterm green assets. As to its financial position, the GFSC has moved from a negative net assets position at the end of 2016 of about £2.3 million to an operating surplus before exceptional items of £579,000 at the end of 2017. Director General William Mason commented: “The most noticeable change from previous years is the elimination of the Commission’s liability for employees

who were historically members of the States of Guernsey’s Public Sector Pension Scheme (PSPS). “During 2017, an agreement was reached that saw the States of Guernsey formally adopting the Commission’s liabilities in relation to members of the PSPS on the basis of a realistic valuation of the liabilities. “This has resulted in a large, albeit technical, surplus on the Commission’s Statement of Comprehensive Income.” The GFSC says it will be taking into consideration its improved financial

position when deciding later this year whether to seek any increase in the current level of fees which it charges licensees. The Commission has also published a report on its thematic review of the financial crime governance, risk and compliance frameworks within smaller firms in the fiduciary sector. The Financial Crime Supervision and Policy Division report, which focused on the controls in place to manage and mitigate money laundering and terrorist financing risks, confirms that most fiduciaries surveyed understand the importance of financial crime governance, risk and compliance. However, it also reflects that a minority of organisations failed to factor into their compliance frameworks the risks specific to their business. Both of these reports can be viewed at www.gfsc.gg n

States releases economic overview

he total size of Guernsey’s workforce increased again last year, according to the States of Guernsey’s bi-annual Economic Overview, which includes indicators that paint a mixed picture of the economy. The report, produced by Strategy & Policy, brings together core government data to provide an overview of current economic conditions. Highlights include a stabilisation of conditions in the local housing market through 2017. The increase in properties sold was reflected in nominal price rises. But while the improving conditions suggest a growth in local confidence, the first quarter of 2018 showed a year-onyear decline in the number of transactions and the real price of properties sold. This may be a temporary setback, but it illustrates that conditions are still fragile. The most recent population statistics, for the year ending June 2017, show a continued net emigration. As a result, the size of the population between compulsory

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school age and state pension age continues to fall. Long term, the persistence of low levels of net emigration presents difficult challenges for the island in the context of an ageing population. An increase in workforce participation rates (the percentage of the adult population in work) has, however, offset this in the short-term. The number of people employed continued to grow, with the total size of the workforce increasing to the end of 2017. The expanding workforce and low unemployment mirrors the situation in the UK. However, like the UK, the increased activity in the workforce hasn’t led to a rise in median earning. Increases in median earnings continue to lag behind price inflation and, as a result, fell by 0.5 per cent in real terms in 2017. In terms of data relating to specific sectors, there have been some positive signs. While conditions within the finance sector are mixed overall, the insurance subsector had a particularly successful

2016, and the indications are that growth in the sector continued in 2017. Elsewhere in the economy, the professional and business services sector continued its steady expansion, although the rate of employment growth has slowed. The construction sector appears to be showing some signs of stabilising, with a small increase in total employment in the sector over the year ending December 2017. The Guernsey Economic Overview can be found at www.gov.gg n

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Property market activity dips

Guernsey reaffirms transparency record

ad weather and an early Easter may have had an impact on the growth of the Guernsey property market, with figures from the Residential Property Prices Bulletin for the first quarter of 2018 reflecting a drop in the House Price Index. Local market activity slowed compared with the same period in 2017. The average price of property also dropped 3.2 per cent from the last quarter of last year. These results follow two strong quarters of growth, with property specialists believing the market had finally turned a corner. A cold start to the year, coupled with early Easter holidays took their toll on market activity, with 23 fewer transactions taking place than were recorded in the

last quarter of 2017. The average purchase price of property was £407,288, as at 31 March 2018, compared with £432,341 in 2017. However, property purchase bond numbers have continued to rise for the year to April, up two per cent against the same period in 2017. Overall, 2017 purchase bonds were more than a third higher than 2015, which marked a low point in the market. Nigel Pascoe, Director of Lending at Skipton International, commented: “These results are disappointing, especially because we still feel there’s a positive outlook for Guernsey property. It’s important not to view this one quarter as a reflection of the market, but to look at the bigger picture, which is one of growth.” n

q1 figures highlight ‘positive’ funds sector

uernsey’s funds industry is seeing a number of new inquiries so far this year and expects a rise in the value of the sector before the end of the year, following a decline in the first quarter’s statistics. Latest figures from the Guernsey Financial Services Commission (GFSC) showed that the net asset value of funds business in the island declined by 2.9 per cent (£8bn) during Q1, with total assets under management and administration amounting to £262.5bn. However, the underlying trend is positive, with £40bn growth over the past three years. The decline was led by the winding-up of non-Guernsey schemes – funds not domiciled in the island but with some aspect of management, administration or custody carried out locally. These fell by £7.6bn, with a number of funds reaching a planned winding-up. Meanwhile, the NAV of Guernsey-based schemes increased by £1.4bn to £209.7bn over the previous 12 months. The GFSC is also seeing an increase in applications for new funds, with a year-on-year rise to more than 110 made over the six months to the end of Q1. The Commission approved 16 new investment funds during the quarter – 10 closed-ended, two open-ended and four nonGuernsey schemes. Guernsey Finance Chief Executive Dominic Wheatley said current activity levels meant that there was confidence in the Guernsey industry. The island has recently announced a proposal to introduce a worldfirst green investment fund product and an update in regulations to the Guernsey Private Investment Fund. “Work is currently being done that will bear fruit in the future. The longer-term trend over the past three years shows that we are on the right track and Guernsey funds are in a healthy and positive position. We remain a stable jurisdiction of substance, able to offer solutions to the uncertainty of Brexit.” n

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uernsey’s Chief Minister has set out the island’s status as a mature jurisdiction with a strong record on the transparency of beneficial ownership, following the recent debate in the UK Parliament on the subject. Deputy Gavin St Pier used his address to Guernsey’s Parliament to confirm that the island’s constitutional relationship with the UK would remain unchanged by Brexit. He also set out how Guernsey meets all international standards on fighting financial crime and its commitment to protecting privacy for individuals’ legitimate personal interests. “Guernsey is a well-regulated, co-operative jurisdiction playing an important role in international capital markets,” he said. “Our legitimate current policy stance on the register of beneficial ownership meets the agreed international standards and maintains an effective balance between transparency and privacy.” Guernsey, along with the other Crown Dependencies, the Isle of Man and Jersey, has worked with the UK government to clarify its constitutional position following proposed amendments to the UK’s Sanctions and Anti-Money Laundering Bill, he said. These amendments sought to impose the UK’s domestic policy on the islands – but this is incompatible with the longstanding constitutional relationship that Westminster “does not legislate for us without our consent on purely domestic matters”. Guernsey isn’t an independent state in international law, he said, but has competence over its domestic affairs and is economically self-sufficient, paying no taxes to the UK or EU, and receiving no contribution from UK or EU revenues. Guernsey’s link to the UK is through the Crown, not through the UK government. Deputy St Pier was concerned that a number of UK MPs “seemed prepared to dispense with established constitutional conventions” in seeking to impose UK policy – a move that “gave serious consideration to riding roughshod over centuries of constitutional convention, ancient rights and our democratic process”. He said the bailiwick’s register provided the required policy outcome for the UK authorities when it comes to fighting financial crime – a fact supported by the UK government through a Home Office review. “We will move to a public register of beneficial ownership if that becomes an international standard,” he said. “It must be a standard agreed by all jurisdictions – there must be a level playing field.” He added: “Public registers are not the agreed policy of the G20 countries – we’re not the only well-respected jurisdiction to have this policy position. Whatever our detractors say, we are not a ‘secrecy jurisdiction’, but we do recognise the legitimate right to personal privacy.” Deputy St Pier said Guernsey would volunteer evidence to a new inquiry into tax avoidance and evasion by the House of Commons Treasury Select Sub-Committee in order to reinforce this point to the UK Parliament. n

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BL jersey Disability law updated Stephanie Habin, English Solicitor at Voisin Law, examines how the introduction of new regulations will protect those with a disability, and what the effects will be on businesses FOLLOWING A STATES of Jersey debate on 21 March, the Discrimination (Disability) Regulations 2018 will come into force on 1 September this year. The regulations are another addition to the expanding raft of discrimination legislation that Jersey has adopted since the introduction of the Discrimination (Jersey) Law in 2014. As of 1 September 2018, disability will join race, sex and sexual orientation, gender reassignment, pregnancy and maternity, and age as protected characteristics under the law. This newest addition accords with the States Disability Strategy for Jersey, launched by the Chief Minister’s department to promote equality for disabled islanders and ensure a good quality of life for those living in Jersey with a disability. According to the strategy, 14 per cent of the island’s population is disabled – that’s 13,900 islanders – while two-thirds of all households in Jersey are estimated to include at least one person with a functional impairment. With an ageing population, these figures are expected to rise and, understandably, the absence of protection for these individuals was a concern. The regulations bring Jersey up to date with other jurisdictions that have such protection in place and seek to ensure compliance with the International Convention on the Rights of Persons with Disabilities. Unlike previous additions to the law, in drafting the regulations and defining disability, Jersey hasn’t ‘parachuted’ in the key provisions of the UK Equality Act 2010. While that focuses on the medical model in defining disability, Jersey has followed the social model used in the convention. Rather than investigating what impact a person’s disability has on their ability to carry out day-to-day activities, the regulations focus on whether the impairment – be it physical, mental, intellectual or sensory – has the potential to affect a person’s participation in an activity, such as work or the use of a service.

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To meet the definition of disability under the regulations, the impairment suffered by an individual must be long-term – namely that it's lasted for six months, is expected to last for six months or is expected to last for the rest of that individual’s life if that's expected to be less than six months. As with the other protected characteristics, the regulations protect against discrimination in relation to disability in the context of employment, the provision of goods and services (whether paid or voluntary), education, access to and use of public premises, disposal or management of premises, clubs and requests for information. The four types of prohibited conduct under the law, which will apply to disability, are: ● Direct discrimination – being treated less favourably because of a protected characteristic ● Indirect discrimination – where provision, criterion or practice is discriminatory in relation to the subject’s protected characteristic ● Victimisation – treating a person less favourably than others because they have made a complaint under the law or assisted another in making a complaint ● Harassment – unwanted conduct towards a person that is related to a

protected characteristic and which has the purpose or effect of violating that person’s dignity; or creating an intimidating, hostile, degrading, humiliating or offensive environment for that person. The regulations also introduce a duty on those in the contexts described above, such as employers and those in the provision of goods and services, to make reasonable adjustments for those with disabilities in the following circumstances: ● Where a provision, criteria or practice causes a disadvantage – for example, working hours and sickness absence policies ● Where the absence of an auxiliary aid, such as information in other formats and hearing loops, causes a disadvantage ● Where a physical feature of a premises causes a disadvantage. The obligation to make adjustments to physical features of premises seems to be attracting the most attention and putting business owners in fear that they will be obliged to make expensive revisions to their premises. A grace period has been granted by the States in respect of this requirement, which won’t come into force until 1 September 2020. This is to give business owners the opportunity to investigate what changes they need to make (if any) and what changes they're permitted to make subject to planning permissions and building by-laws. In determining whether reasonable steps have been taken to prevent or remove the disadvantage caused, regard will be given to the cost and size of the business, together with the extent to which any steps would be effective, practical and reasonably foreseeable. The regulations will be a welcome addition to the law for those who have a disability. And it’s appropriate that Jersey brings itself into line with other jurisdictions by introducing legislation that will protect against this form of discrimination. n

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Digital Jersey signs cryptocurrency M o U

igital Jersey has signed a memorandum of understanding (MoU) with one of the world’s largest cryptocurrency exchanges, Binance. Under the MoU, Binance will develop a compliance base and cryptocurrency exchange in Jersey. Digital Jersey will collaborate with Binance to deliver training and other initiatives to support the blockchain ecosystem in the island. Digital Jersey will also support Binance in discussions on compliance with anti-money-laundering regulations, and to establish exchange licensing and local banking relationships. Digital Jersey CEO Tony Moretta commented: “Jersey was one of the first countries in the world to clarify the legal position of cryptocurrency exchanges in 2015. We can provide a permissive sandbox for innovative crypto businesses to thrive without moving away from the general high standards of regulation that apply in our jurisdiction.” Binance CEO Changpeng Zhao said: “We have chosen Jersey to be the next big step in our global expansion strategy for its clear and pro-crypto investment and regulatory environment. We are confident

T Pictured l-r: Stephen Stonberg and Zhou Wei from Binance; Tony Moretta, Digital Jersey; and Senator Ian Gorst

the cooperation with Jersey will not only benefit the local economy, but also form a strong operational foundation for our expansion into the rest of Europe.” Digital Jersey hopes the move will create 40 new jobs in the sector. It is working with the Binance Foundation to establish training schemes covering a range of digital skills, including distributed ledger technology, artificial intelligence and regulatory compliance. Binance will also invest in new Jerseybased start-ups in this area through Binance Labs, encouraging innovation and supporting Digital Jersey’s objective to diversify the island’s economy and establish Jersey as a leading digital centre. n

island scoops Best IFC title

Pictured l-r: Anndy Lian, CEO, Linfinity; Karen O’Hanlon, Managing Director, First Names Group (accepting the award on behalf of Jersey); and Stephen Harris, CEO of Clearview Financial Media, publisher of WealthBriefing Asia

ersey has been named Best International Finance Centre at the WealthBriefing Asia Awards 2018. Showcasing ‘best of breed’ providers in the global private banking, wealth management and trusted adviser communities, the awards were held at the Westin Singapore and recognised those deemed by the judges to have ‘demonstrated innovation and excellence during 2017’.

20 july/august 2018

Jersey House Price Index published

Geoff Cook, CEO of Jersey Finance, commented: “I am delighted to see Jersey honoured once again at these prestigious WealthBriefing awards. "It is encouraging to see that, as a result of working together with key stakeholders and forward-thinking service providers in our industry and across the Asian marketplace, the island continues to be recognised as a world-class IFC.” n

he latest Jersey House Price Index reflects large increases in the value of local homes to the end of Q1 2018. The average price of homes on the island rose by six per cent in Q1, and by 12 per cent compared with the first quarter of 2017. Turnover of properties was down, suggesting that price inflation is the result of demand outstripping local supply. Skipton International said it views the level of price increases as unsustainable, but is urging islanders not to take these quarterly statistics in isolation. For those looking to move, it remains a good time to put a home up for sale, with a ready market of buyers, it said. The price of most property types rose in value in the first quarter of this year, with only one-bedroom flats dropping marginally in price from the final quarter of 2017. Four-bedroom homes increased in value the most, with the average home of this size now costing £949,000, an increase of £114,000 on 2017. Lorraine McLean, Mortgage Sales Manager at Skipton International, commented: “There have been suggestions we are experiencing a boom in the market similar to that of 2007 prior to the crash, but we believe the market is different now. The mortgage industry has moved on greatly since then and stricter lending criteria means homeowners are in a better position to weather changes to the market. "However, we do not wish to see house prices continue to rise beyond people’s affordability. Growth has to be gradual and maintainable.” During the quarter, there was also a large increase in the number of high-value two-bedroom flats sold, which represented the largest rise since 2012. In particular, the proportion of transactions for higher-end flats valued at over £550,000 more than doubled from the previous quarter. n

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Jersey Finance welcomes IEA report on IFC s

ersey Finance has welcomed a discussion paper that seeks to dispel the myths surrounding international financial centres (IFCs) and calls for a more 'rational debate' around the function of IFCs in facilitating global trade and investment. Undertaken by the Institute of Economic Affairs (IEA), with support from Jersey Finance, the paper, entitled The Benefits of Capital Mobility, examines the growing importance of IFCs in the global economy and argues that they are, in reality, benchmarks for transparency and good governance. In particular, the paper argues that clamping down on IFCs wouldn’t raise tax revenues for larger countries and preserve existing levels of investment, but would change investment flows by politicising investment decisions. The paper also demonstrates how the tax neutrality offered by IFCs benefits investors and countries in terms of investment in infrastructure, wealth creation and future prosperity. Among the key conclusions of the paper are that: ● The success of IFCs lies in three key drivers: an increase in the global stock of investable capital; the rise of new

investment opportunities outside Western Europe and North America; and the growth of tax and regulatory intervention by governments ● As more investment capital is allocated across a diverse range of jurisdictions from investors around the world, IFCs help to mitigate the potential for multiple taxation, ultimately having a positive impact on investment returns, which compound over time ● Undermining the existence of IFCs would harm investment, economic growth and international capital flows, while the promised benefits from intervention are unlikely to materialise. Commenting on the report, Geoff Cook (pictured), CEO of Jersey Finance, said: “When it comes to cross-border financial services, there is still a considerable amount of misunderstanding and misrepresentation. "We think it's vital to form judgments based on facts. For this reason, we're committed to providing a clearer picture of the reality through research, with the aim of prompting a sensible, more focused conversation on what it is that centres such as Jersey actually do. “This paper helps in that regard, seeking to reframe the international financial

services debate and clarifying, with facts, the positive impact Jersey can have on the futures of people all over the world.” Jamie Whyte, Director of Research at the IEA, added: “Offshore banking centres play an important role in the global economy, increasing international investment and economic growth. "The attacks on them by European politicians are little more than demagoguery and a desire to eliminate tax competition.” The Benefits of Capital Mobility report is available at www.jerseyfinance.je n

I o D Chair calls for more young professionals

he Chair of the Jersey branch of the Institute of Directors (IoD) has called on all islanders to let the outside world know that Jersey is ‘open for business’ and an attractive place for young professionals, as well as students, to come to. Speaking at the organisation’s Annual Members Meeting (AMM) on 23 May, Chris Clark (pictured), entering the last year of his three-year term as Chairman of the IoD Jersey, said: “The IoD strives to ensure the island retains the simple things that differentiates us – clear and consistent policy, taxation and a brand positioning statement that will maintain our place as an attractive place to live, work and prosper despite the inexorable challenges we face beyond our shores, courtesy of UK opinion or media mischief. “We're all responsible for sharing the positive aspects of island life to ensure we remain attractive as a jurisdiction for those looking to step out of the UK or elsewhere and land in a place that's truly ‘open for business’. I fear the island is not seen, beyond our shores, as a stepping stone for professional people, but more a retirement

22 july/august 2018

location. Thirty-plus years contributing to our island economy is more favourable to five, therefore I will continue to support Highlands [College] in my last year and their aspirations to become a South Coast University campus. “[I will also support] Digital Jersey’s efforts to diversify our economy through their Sandbox Jersey and other initiatives. [These encourage] a young and dynamic sector to gain greater traction, which in turn will help to protect our key industry of financial services as they themselves embrace artificial intelligence and modern

ways of working to provide continued, exceptional services and experiences to their clients.” Also announced at the AMM were plans to continue to focus on diversity and encourage community engagement among members. Clark added: “In my second year, I'm proud of what's been achieved by the local branch with regards to our influence in government policy, but my desire is to ensure we deliver a greater, more positive impact across the island. To ensure that the government has a conduit to industry, we will continue to work in partnership with the Chamber, where policy requires a strong, joined-up response. “We will strive to ensure quarterly meetings occur with the Chief Minister and the new Chief Executive of the States of Jersey, so we may be better placed in understanding their challenges, while providing us with an opportunity to be both a sounding board and critical friend.” The IoD Jersey has a membership of around 600, including business leaders representing a broad range of industries. n

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Interview

Born and raised in Jersey, Mark Boleat’s broad-ranging career saw him become the political leader of the City of London, a role he held until last year. With a view across Jersey, Guernsey and the City, he spoke to Businesslife about the strengths and weaknesses of the islands Words: Nick Kirby Pictures: Jon Barlow

24 july/august 2018

asked to become Chairman of the Jersey Development Company (JDC), which I did. I chaired the JCRA for six years and the JDC for four. In 2012, I was elected political leader of the City – we call it Chairman of Policy and Resources, but it’s effectively political leader. I ceased being Chairman a year ago as there’s a maximum five-year term, and served as Deputy for a year, which is the City’s custom. While I no longer have a formal position, I’m still very involved in the City and I sit on major committees, so am heavily involved in discussions around Brexit. I also chair the Governors of the City of London Academy Highbury Grove, and I chair a working group which aims to deliver a housing programme of 3,700 units in 10 years. Since I ceased being political leader, I’ve become Chairman of Link – the cashdispenser network – and that’s my current main position.

things happen that are completely out of the control of the islands that can benefit them or adversely affect them – and that can certainly be said for Brexit

That’s quite a background, and covers both the Channel Islands and the City. What’s your view on the relationship between the two? The islands complement the City. Jersey did a very good report a few years ago on its value to Britain – it followed the format of publications we’ve done in the City on the value of London to the UK economy. In our case, we have to convince some people that what goes on in the City is of value to the whole of the UK economy – it creates jobs, tax revenues and helps develop prosperity throughout the country. And I think the Channel Islands fill the same role. There’s an instinctive view that offshore finance centres – or ‘tax havens’ as some call them – are about taking money from Britain. I think that report, which was an authoritative report by respected analysts, met a very real need, and I’ve certainly been able to use it when people have challenged me about Jersey. What’s your current view on how Brexit will affect the City? And how do you see that affecting Guernsey and Jersey? Given that Jersey and Guernsey have finance industries that are international, they’re liable to be affected by international developments. So, things happen that are completely out of the control of the islands that can benefit them or adversely affect them – and that can certainly be said for Brexit. I actually did my Masters degree thesis, 35 years ago, on the Jersey economy and the European Economic Community – and I did a sequel for the Jersey Policy Forum a year or so ago, on the implications for Jersey of Britain leaving the EU. At first sight, the implications should be modest because the Channel Islands aren’t in the EU. On the other hand, given the uncertainly that’s been created – and that the islands have very strong links not only with the City but also with other centres in the EU – anything can happen, and the islands need to be prepared for that.

▼

How did you get to where you are now? Opportunism! I never had a plan. I was born and went to school in Jersey. I left Victoria College with poor A level results and failed to get into university, so I went to a college of technology. Ultimately, I did manage to get a degree in Economics and a Masters in European Studies. I struggled to get a first job, so I spent a year teaching at Dulwich College then went to work for The Industrial Policy Group. I got my first big break when I joined the Building Societies Association in 1974, ostensibly to work in public relations. I quickly discovered that it was a sector in the middle of a political storm because of what was happening in the housing market at the time. Yet there seemed to be nobody who understood either politics or economics – and as I understood both, I found myself in the right place at the right time. In just over 10 years, aged 37, I was appointed Director General. Having run the association for eight years, I moved on in 1993, when I was headhunted to become Director General of the Association of British Insurers – a position I held for six years. During this time, I still kept strong connections with Jersey – I chaired a working group on immigration policy in 1995, and I also prepared a report on housing policy for the then Housing Minister. In 1999, I decided to move on to a portfolio career – consulting on a variety of subjects, such as public policy, regulation and housing finance. And I picked up a few Non-Executive Directorships, including the Gibraltar Financial Services Commission. I was then asked if I would like to become a Councillor of the City of London. I accepted, and in 2002 I became an elected Councillor. In a matter of a few years, a number of things came together. In 2010, I became Chairman of the Jersey Competition Regulatory Authority (JCRA), which subsequently merged in practice with its Guernsey counterpart. A year later, I was

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Interview

The

interview mark boleat

Interview

As far as the City is concerned, there’s more than a negligible chance that Britain will be a third country from March next year, so City institutions are preparing for that – and they’ll do whatever they need to do to continue providing the service they want to post-Brexit. They will take longer-term decisions about location when everything settles down and the relationship between Britain and the EU is clear. I doubt it will finish up as a straight, third-country relationship – such as Peru or South Africa – but on the other hand, it will clearly be very different from the current arrangement. What’s your view on registers of beneficial ownership and the different treatment of the overseas territories and the Crown Dependencies? When you’re dealing with public policy issues, logic goes out of the window, or at least takes second place. The Channel Islands know they have to be squeaky clean on everything, and squeakier than everybody else because they’re offshore finance centres – even if there are onshore jurisdictions with laxer regulations. Jersey and Guernsey have to be prepared to deal with issues that are thrown at them, where they can legitimately point to any number of international studies and say their arrangements on money laundering and the sharing of information are among the best in the world – and in many cases better than Britain and America. However, that doesn’t alter the fact that they’re going to be a target – people do tend to lump together the overseas territories and the Crown Dependencies, yet they’re very different in the nature of their business, and the nature of their relationship with the British government. When David Cameron was Prime Minister, he said the Crown Dependencies could no longer be considered as tax havens – and I think that applied when this issue went through Parliament recently. The politicians who led it understood this point after representations, and Jersey did a good job of explaining that there’s a difference. It doesn’t alter the fact that there may be another go at Jersey and Guernsey. And people currently using the islands may take the view that this is all going to change – therefore they might want to look somewhere else. So far, the islands have handled it very well and I know they’ve got a favourable outcome for the time being. You mention the Channel Islands being lumped in with the overseas territories, indeed all other offshore jurisdictions, especially since the Panama and Paradise Papers. What can be done about that? Geoff [Cook, CEO of Jersey Finance] does a very good job. I’ve attended meetings in the City where either Jersey

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FACT FILE Name: Mark Boleat Age: 59 Position: Chairman of Link Scheme, Chairman of the Housing and Finance Institute Married to: Elizabeth Children: Jonathan Hobbies: Golf, cycling, family history and watching rugby Interesting fact: Established and ran a trade association for ‘gangmasters’ – the Association of Labour Providers Website: www.boleat.com was attacked and he’s responded, or where Jersey wasn’t openly attacked but he’s contributed usefully to the discussion. And I did the same when I was political leader of the City. The thing is, you can’t simply put people in the black and white categories of those who want to listen and those who don’t, because there are people in the middle. You can shift people from being a vocal critic to being a silent critic, and you can push some people from being neutral to understanding the Channel Island position. The islands have done very well in achieving that. In light of Brexit, talk of the islands becoming independent has reared its head again. What’s your view on that? I think it would be a disaster for the islands and I’ve said that publicly many times. The reality is that there is no rich independent island in the world. Full stop. They just don’t exist. Every rich, small territory of under half-a-million people is ‘semidetached’ – that’s Jersey, Guernsey, the Isle of Man, Bermuda, Gibraltar and so on. The richest independent small island

is the Bahamas, which is roughly half as wealthy as Bermuda. When businesses and individuals deal with the Channel Islands, they do so in the knowledge that they’re dealing with British territories and that ultimately nothing disastrous can happen. Jersey isn’t going to be taken over by a bunch of radicals that are going to nationalise the banks and impose military rule. Independence sounds great – we can be masters of our own destiny and not subject to anything the UK does. Fine, you can have that – as long as you’re happy not having access to UK universities or hospitals. It’s a nice thought to have total control, but we can’t have that if we want to interact with other people. Look at it from the perspective of financial regulation, which the islands have managed very well – this isn’t done in isolation, it’s done in accordance with international norms and close working relationships with other regulators. And if they didn’t do that, they would have a tiny finance industry. Looking forward, is there anything you think the islands should be doing that they aren’t – or is there something they should be doing better? We often hear talk of the ‘next big thing’, but is that just an elusive Holy Grail? I’m very sceptical of governments that think they can bring in the next big thing. Jersey has tried lots of things, like gambling, for instance, or the aircraft registry, which hasn’t really worked. For those who say that the Channel Islands are too dependent on finance, there’s no

The Channel Islands know they have to be squeaky clean on everything, and squeakier than everybody else because they’re offshore finance centres

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Interview

industry that’s going to produce the returns that finance does. The notion that we can start knitting sweaters again and tinning potatoes and that’s somehow going to produce revenue? Well, it’s not. Finance is absolutely critical and it’s really important that the Channel Islands continue to be major finance centres. The single most important thing here is to have a strong relationship between the industry, the regulator and the government. It’s the people in the industry who are going to see the opportunities, not politicians or civil servants – and they then have to make a case, be that to the regulator or the politicians. They need to say ‘we have a market opportunity here, we need to move quickly, this is what’s needed in respect of the law, this is what we need on regulation’. And it needs the politicians and the regulators to be sensitive, bearing in mind their interests are different. The regulators are going to ask questions that industry isn’t, and the political system in Jersey, I know, can be unreasonably slow, which is something that needs addressing – Jersey needs to be more nimble. What’s really important is that the islands should have a welcoming business environment – because you get sectors or industries that exist in a place which are entirely fortuitous. The Isle of Man has a space industry. Why? Guernsey is one of the world leaders in captive insurance – there’s no particular reason for it being so, except that it is. And once you’re there and you’ve got the expertise, you attract more business. In order for Jersey, in particular, to create a welcoming business environment, it has to do a number of things. First, the quality of education remains poor – it needs to be absolutely world class and help produce top-quality staff. This will attract business. The high cost of housing in Jersey is a real constraint for attracting and keeping people in the island. This needs to be addressed, but that will only happen by building more houses. It’s an obvious trade-off that seems to escape some politicians, who simultaneously say we need more housing, but don’t take the necessary steps to enable that to happen. And then Jersey needs a political environment that helps attract businesses. At least the immigration policy is starting to look more sensible. There’s a recognition that Jersey needs a continually increasing population to have enough people of working age and to keep businesses going. But I still think the policy is in danger of being too restrictive. There is still a view in Jersey that ‘we don’t want any foreigners here’, so politicians have a real duty to explain why immigration is good for the island. If the people of Jersey think a rising population is a problem, you should look at the

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consequences of a falling population – Alderney is a good example of that. Is there anything else you’d like to add, perhaps on the relationship between the islands and the City? The relationship is good. And I think it’s got a lot better because of the work of Jersey Finance and Guernsey Finance and Ministers on both islands. I’ve seen Ministers in London quite a lot, indeed I’ve hosted lunches for them. I’ve made a point of inviting current and previous Chief Ministers to City events in a way they haven’t been invited before. I’m still a Jerseyman at heart, and I’ve made it clear that if there’s anything I can do to help the islands’ relationship with the City, I will. n

the political system in Jersey can be unreasonably slow, which is something that needs addressing – Jersey needs to be more nimble

NICK KIRBY is Editor-in-Chief of Businesslife

july/August 2018 27

A BL event

In partnership with:

Sponsored by:

the channel islands funds forum

“

UNTANGLING COMPLEXITIES IN CHALLENGING TIMES

”

WEDNESDAY 26 SEPTEMBER 2018 HOTEL DE FRANCE, ST HELIER, JERSEY 9AM TO 3.30PM, 5.5 HOURS CPD AVAILABLE Delegate rate £245 until 31 July, £395 thereafter Supported by:

Places can booked at www.cifundsforum.com or by emailing carl.methven@blglobal.co.uk

Words: Emma De Vita THE SUNDAY TIMES Rich List included 141 women in its top 1,000 this year. That might be a relatively small number, considering women make up half of the world’s population, but it actually represents an all-time high for the list. This record figure is symbolic of the increasing number of women who are generating and handling wealth, be that through inheritance, self-made entrepreneurial fortunes or corporate careers. And more wealthy women make for more female clients for the law firms and wealth management firms that help them. But how prepared are these firms to cater to female clients, some of whom may prefer to deal with another woman? Historically, the vast majority of private clients using the Channel Islands have been men. “The ‘pale, stale, male’ cliché definitely applied,” says Colleen McHugh, Head of Wealth Management at Guernsey-based Butterfield Bank. She

It would be easy to assume that the increasing number of rich women would prefer to work with female wealth advisers – but that’s not always the case, often they just want the best person for the job

Sisters aren’t just doing it for themselves 30 july/august 2018

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Wealth

sees it as a reflection of society where, in general, men were the breadwinners and took care of the finances. Yet things are changing. Fiona Waite, Client Director at RBC Wealth Management, says that while RBC’s client base was once made up of men in their 60s, now there’s a 60/40 split between men and women. “This is a significant shift and indicative of an increasing responsibility towards generating and managing wealth for women,” she says. A growing proportion of female clients are women who are successful in their own right. “We’re seeing more female entrepreneurs emerging who need advice and support while running their businesses,” says Waite. “Many sell their companies when they reach a certain stage. They also need advice on how to manage the money.” Lorraine Wheeler, Client Services Director at First Names Group, has also noticed an increase in the number of approaches from self-made wealthy women who are looking to set up trusts for their husbands and children. Another strand of new female clients is divorcees or widows in their 60s who are taking control of their finances for the first time. Some of them “want to deal with a woman who understands what it’s like to be a woman”, explains Wheeler.

While finding a sympathetic female adviser is important to some women clients, it’s not the norm. “In my experience, women don’t typically factor sex into their consideration of which financial adviser to use,” notes McHugh. “Women are used to living in a world where men dominate a disproportionate number of professions. We see male doctors, dentists, opticians, so why not a male financial adviser? I think, as with men, women want credible and qualified individuals who don’t use jargon as a crutch – we appreciate forthrightness and honesty, regardless of the sex of the person dispensing the information.” It’s more a case of matching the personalities of client and adviser, argues Wheeler. “It would be a mistake to say that women would prefer to work with women,” she says. “It’s more down to the actual individual and what they’re looking for and what they want their finances to achieve. “If they have children and are looking for a trustee who’ll fit into their shoes, making sure the children don’t inherit in one go and the money is looked after, in that situation women might look to women who are mothers, because they

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FINDING THE BEST ADVISER

july/August 2018 31

Wealth

think they would know what it’s like to be in that situation.” Michelle Tring, Senior Client Manager at Estera, is certain the savvy female clients she has encountered wouldn’t ask for a female adviser just for the sake of it. “If they’ve got this type of wealth, whether through family wealth or building up their own business, they’ve obviously got a strong level of expertise. And what they want is the best advice possible from the best person possible. Whether that’s a woman or a man is entirely irrelevant. It’s just about building those relationships and making sure that it works.” But for those who deal with clients from the Middle East, things can be different. Claire Malkoun, Group Head of Business Development at VG, who’s spent considerable time in the region, says that different cultural sensitivities around

gender must be respected. She notes, though, that there’s a growing number of women who are starting up their own businesses or having a stronger voice in family affairs. “Clients have primarily been men,” she says, “but I’m dealing with a lot more women in business in the Middle East and there are a lot more entrepreneurs and females within the families who are starting to be empowered. I think we’ll see more female private clients coming through.”

PERSONAL PREFERENCE In these cases, it’s a question of personal preference for the female client. “If they’re very strict in terms of their religion and culture, you have to respect that. Similarly, if that client would prefer a female adviser, you have to respect that preference,” says Malkoun.

what wealthy women want is the best advice possible from the best person possible. Whether that’s a woman or a man is entirely irrelevant

However, it would be dangerous to take a blanket approach towards female clients, she says. “Some women wouldn’t have a preference as to whether it’s a male or a female advising them.” That said, Malkoun suspects that there are some female clients who would “distinctly prefer a woman because of shared thinking, understanding and perhaps a shared vision in terms of family values”. It makes for a valuable shortcut between client and adviser. “This helps the relationship immensely because it means you can build and instil trust very quickly if that female client feels she has that support and comfort from the start,” she says. Given the growing number of female clients, wealth management and law firms would be wise to increase the number of female advisers in their team, to offer a broader pool of perspectives, experience and personalities to match their changing client base. “The industry needs to evolve and become more empathic in the true sense of the word – really striving to understand another person’s viewpoint,” argues McHugh. “It feeds into a broader shift in society, which is becoming more accepting and tolerant of a multiplicity of viewpoints. And that can only be a good thing.” “It’s important to note that the pool of women coming into the wealth management industry is limited,” says Fiona Waite. “At RBC, we have a Women in Leadership committee, of which I’m a member, which works hard to ensure that women at the bank stay with us, and are promoted to senior roles, addressing the current imbalance that exists.” The business case for having more female advisers is irrefutable. Wheeler tells of a recent instance when her colleagues delivered a pitch and were later told that they didn’t win the work because they were male. “Nobody had told us that the client specifically wanted to deal with women,” explains Wheeler. “Otherwise we could easily have selected a female director to run the pitch instead.” The experience proved how easily work can be lost if gender balance isn’t taken into consideration. Wheeler says the firm is now looking into having specific female teams available for female clients. “We can’t assume that people want a women-only team, but if they ask for it, we can arrange that. That’s a response to both client demand and the level of wealth in the marketplace and who’s generating it.” And the wealth generators of today and tomorrow will no longer solely be the elderly white men of yesterday. n EMMA DE VITA is a freelance finance writer

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Advertising feature

IN profile:

the belcher family Vantage Group of Companies, Channel Islands For multi-disciplinary business Vantage, the move to Jersey has shown the demand for a one-stop shop, and shone a light on a desire for innovation in the island. Being a family affair, Martin, Verienne and Alex belcher explain why jersey is the ideal platform for business growth What does your business do? Martin Belcher: Vantage is a Channel Islands professional services firm, offering a range of services to new and existing businesses. Our regulated services include insurance broking, captive insurance management, pensions, wealth management and life assurance. Our non-regulated services comprise property, remuneration surveys, recruitment and HR advisory. We began in Guernsey as a general insurance broking business in 2002, but gradually expanded our services and moved most of the business to Jersey 10 years ago, where Richard Packman was spearheading Vantage and still remains CEO of the financial services group. Alex and Verienne slowly followed and now we are a truly family affair on the island. Was the relocation straightforward? Alex Belcher: Verienne and I both had a positive experience of the transition. Vantage was expanding rapidly in Jersey and so I moved over to work with the family business on the property side. When I arrived, I saw the need for shared, high-quality and good-value office space on the island, particularly for start-ups and digital ventures. So, we developed the whole of Forum 3 on Grenville Street, where you can now see a broad crosssection of innovative businesses, and Digital Jersey, which are flourishing. Verienne Belcher: I head up Vantage HBA and the marketing side of Vantage. I commuted to Jersey from Guernsey for a couple of years, but I soon realised it would make more sense to move to Jersey. So I spent a summer immersing myself in the island culture, to see what it would be like. Although it was a daunting prospect,

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like to think we’ve played a part in assisting the start-up and digital boom that’s happening here. The take-up of our shared office-space offering has been staggering – the spaces we own and manage are always full, which is evidence of the fact that Jersey is so supportive of innovation. In fact, we’ll soon be moving offices ourselves, so that our current space can be reoccupied too.

The Belchers (l-r): Verienne (Managing Director, Vantage HBA and Director, Vantage Marketing); Alex (Managing Director, Vantage Innovation); and Martin (Chairman, Vantage) I found Jersey very welcoming, and I think that’s partly due to the fact that it has such a diverse community. MB: Locate Jersey were very helpful in assisting with all aspects of moving, such as ensuring we made all the right contacts locally to keep Vantage developing in the right direction. They’ve looked after the whole family very well. And it doesn’t stop when you’ve made the move – their after-care events are invaluable and have helped each and every one of us feel very welcome on the island – even if we do come from Guernsey! Is Jersey particularly well suited to your business? AB: Jersey is very forward-thinking, which is the ideal platform for Vantage – and we

How are you finding living in Jersey? VB: Alex and I were already familiar with Jersey because we used to visit when we were younger, taking part in swimming competitions at Fort Regent. I’m still very much into my sport and I’ve found the wealth of sporting opportunities in Jersey to be fantastic. Taking part in a sport is one of the best ways to integrate yourself into the community, and that’s certainly been true of Jersey – I’ve made some lovely friends. How do you see your business evolving? VB: We feel so well supported by the local infrastructure that we’re now looking to expand some of our services – such as our salary survey – to other jurisdictions such as Malta, Cayman and London. MB: I see a bright future for Vantage in Jersey, and I think that’s because our multi-service offering helps us stand out on the island. AB: We’re certainly an ambitious family, and it’s refreshing that Jersey reflects this with opportunities for Vantage to develop and grow. As a jurisdiction for both a family and business to be based, the island is a fantastic proposition. n This advertising feature was produced in partnership with Locate Jersey.

july/August 2018 33

AIFMD

five years on 34 july/august 2018

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AIFMD

Words: Richard Willsher

In the run-up to its launch in 2013, the European Directive was expected to bring a big bang to the alternative fund management sector. So far, its effect has been more of a whimper

THE ALTERNATIVE INVESTMENT Fund Managers Directive (AIFMD) was first mooted in the wake of the financial crisis. It was intended to regulate the activities of the alternative funds sector. The aim was to improve and increase the monitoring of the systemic risks they might pose, and harmonise the rules for management and marketing of alternative investment funds (AIFs) into the EU. It was also expected to increase transparency for investors in alternative funds such as real estate, private equity, infrastructure, hedge funds, commodities and some types of derivatives. On the face of it, AIFMD seemed like a good idea. But the potential administrative, IT and compliance burden that it might have entailed wasn’t welcomed by the alternative funds industry. “The EU wanted to encourage alternative investment fund managers [AIFMs] to be physically situated in the EU if they intended to raise capital from EU investors,” explains Malin Nilsson, Managing Director of Duff & Phelps’ regulatory consulting team in Jersey. “But it wasn’t quite necessary. Most AIFMs already had a manager in Europe, such as in Ireland, or they relied on a national private placement regime [NPPR] instead of making use of the EU passport regime. “It’s fair to say that many of us had reservations about how AIFMD would be implemented in practice and the additional work it would involve, as most of the players in this space were already operating to a sophisticated level.” Furthermore, in the eyes of some, AIMFD was never going to be fit for purpose. It aimed for a one-size-fits-all solution to the problem of regulating AIFMs and their funds. Peggy Gielen, Technical Manager at Jersey Finance, believes it was a flawed approach for such a diverse range of funds that are quite different in their risks, such as private equity and hedge funds. “The high-level conclusion that can be drawn is that AIFMD hasn’t delivered on its promises,” she says. “We are now five years on from the original proposal and recent statistics published by the European Commission show that not all the main goals of AIFMD have been achieved. Most notably, AIFMD hasn’t created a fully harmonised regulatory framework for AIFMs and AIFs within the EU.”

Research carried out by Europe Economics among limited partners in private equity funds found that the measures didn’t provide enhanced investor protection either. “AIFMD may have induced some relatively insignificant benefits in terms of slightly better reporting and increased transparency, but at a high cost,” Gielen adds. “It’s apparent that AIFMD hasn’t made – even, could not make – any measurable difference in lowering the systemic risk associated with private equity.” This is by no means the whole story for the Channel Islands, however. From the outset, they pursued a twin-track approach that has stood them in very good stead. Both Jersey and Guernsey achieved approval as ‘third

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RISK AND REWARD

AIFMD

countries’ under AIFMD, to be jurisdictions that would be well placed to gain passporting rights to all EU member states for funds domiciled in their islands. In the event, the passport issuance process has ground to a halt while Brexit negotiations proceed. In the meantime, NPPRs have proved to be successful. NPPRs rely on the approval of a member state to allow particular third-country funds to be marketed in their jurisdiction. Far from leading to 27 separate sets of bilateral approvals, one with each member state, NPPRs have turned out to be a well-founded, practical way to do business. This is because most AIFs are marketed in few countries. Statistics released by the European Commission in the proposal to amend the Directive on the cross-border distribution of collective investment funds, revealed that ‘… the EU investment fund market is still predominantly a national market – in fact, only three per cent of EU AIFs are registered for sale in more than three member states’. NPPR arrangements are predominantly with the UK, Ireland, Luxembourg, Germany and Sweden – beyond these, there are very few significant markets for wholesale AIFs in Europe.

DUE DILIGENCE The job of obtaining approval under a jurisdiction’s NPPR falls to law firms acting on behalf of funds or their managers. Ben Morgan, a Partner and Head of the Corporate and Finance Group at law firm Carey Olsen in Guernsey, explains that such due diligence in the key jurisdictions is now a well-trodden path. In the context of AIFMD, he says: “Ideally, we would have had the best of both worlds. The option of the passport and the option to privately place into jurisdictions that allowed it. Why would you not want the best of both worlds? But for most of the funds that use Guernsey, the NPPR works just fine.” In commercial terms, the NPPR approach has facilitated a flow of alternative funds to the islands. It has also demonstrated that while the UK financial services industry is in turmoil over its relations with the EU, it’s business as usual in Jersey and Guernsey. “AIFMD has demonstrated the ability of the Channel Islands to be flexible and innovative,” explains Guernsey Finance’s Acting Director of Strategy, Andy Sloan. “There wasn’t anywhere else in the world that was able to move as quickly and nimbly as we were, to create an AIFMDcompliant regime and a non-AIFMD one. We adopted a bifurcated approach to the European directive. And we are able to provide an environment where you could market directly into Europe using an

While the UK financial services industry is in turmoil over its relations with the EU, it’s business as usual in Jersey and Guernsey

AIFMD in a nutshell AIFMD was first proposed in spring 2009 and took effect in July 2013. The European Securities and Markets Authority (ESMA), the EU regulator, issued its final reporting guidelines on 1 October 2013, allowing for report filing to be phased in from 31 January 2014. Reports cover a wide range of criteria including: investment profile; concentrations of risk within a portfolio; and the risk profile of individual alternative funds. The Directive covered AIFMs with assets under management (AUM) exceeding €100 million. Those with AUM of more than €100 million or unleveraged funds of more than €500 million, with a lock-up period of five years or more, are required to submit annual reports. Those in the range of €100 million to €1bn must submit reports every six months, and above €1bn, quarterly. Specific AIFs larger than €500 million must report quarterly, while certain AIFs investing in non-listed companies, must, under certain conditions, report annually.

NPPR. We’ve always contended that the NPPR can get to the European market quicker and cheaper.” But it hasn’t all been plain sailing. Ben Morgan says that, following the introduction of AIFMD, there was a bit of a hiatus in deal flow. Fund managers delayed their plans to roll out new funds in the islands while they gauged the possible administrative and cost implications of the Directive. In 2016, however, the market picked up again with a surge of new funds – that year was a record one for Guernsey. And the deals have continued to flow, confirms Kevin Smith, a Director at fiduciary and administration services firm Estera, based in Guernsey. He points to a series of year-on-year fund increases. He does note, however, that AIFMD is eventually likely to figure more highly on the alternative funds agenda. “We anticipate that at some stage, Guernsey will be issued with the passport. The NPPR regime might phase out in the future, but we are well positioned for that already – to adopt the full passport and compliance with AIFMD.” Right now, five years on from the introduction of AIFMD, the islands continue to be in the sweet spot as the European domiciles of choice for alternative funds. And they are likely to remain so for the foreseeable future. Guernsey Finance’s Andy Sloan best summarises the current state of play. “Brexit is all upside for us,” he says. “In the short term, we have a boost to business – we’re able to provide greater security and certainty [than the UK]. There’s little change from where we’re sitting. We are a third country now and will remain so.” He ends with a call to action: “We know how to operate into mainland Europe using the NPPR and we have access into the UK. If you’re looking to sell into Europe we’re the proven route.” n RICHARD WILLSHER is a freelance finance writer

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BUSINESS LIFE

The funds Edition 2018

Get involved in 2018 FOR EDITORIAL QUERIES, CONTACT NICK.KIRBY@BLGLOBAL.CO.UK FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK

Advertising feature Marie McNeela (left) and Alice Read

Local expertise, global excellence Intertrust is one of the largest providers of corporate services administration in the Channel Islands, with a 50-strong team. Here, Head of Corporate Services Alice Read and Guernsey Director Marie McNeela discuss the growth of the market and why the Channel Islands have become the go-to jurisdictions for corporate clients 38 july/august 2018

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Advertising feature

What is corporate services administration? Alice Read: Corporate services administrators work alongside legal and tax advisers throughout the lifecycle of many companies, covering everything from implementing the structure and ensuring that the articles replicate the entity, to dealing with the necessary regulatory approvals. Administrators such as Intertrust typically have a very active role in many companies. For example, we provide the majority of the directors on the company boards and we often take responsibility for any transactions or acquisitions that the company is going to make. When there are changes to the composition of the company, such as a change of shareholders or directors, we update the documentation and notify the regulator. We file annual returns and make sure the company stays in compliance with the law and local regulations. We’re not the architect of the structures – that role is for the legal and tax advisers. We’re the builder, so we start by working with the advisers to determine which jurisdiction or jurisdictions an entity needs to be in and then build and manage it from there. The beauty of what we do is that we free up the client’s time, so they can focus on their own core business activities to make their business thrive. What type of clients need these services? Marie McNeela: Clients can range from emerging market businesses and smaller privately held and early-stage businesses right up to companies that list on major stock exchanges, private equity firms and fund managers. The industries that these companies work in are extremely diverse, such as cleantech, energy, financial services, food and beverages, healthcare, infrastructure, media, natural resources, pharmaceuticals, retail, technology, telecommunications and utilities. Clients are increasingly looking for a globally consolidated service as they have entities around the world and so require a single point of contact close to where they’re located, who speaks the same language and is in the same time zone as them. Worldwide best practice and local knowledge is a powerful combination and one that clients are demanding today. An example of this is when a client urgently requires a new entity as part of a fast-paced transaction, to act as a holding company for an acquisition target – our scale and internal support functions allow us to react quickly and respond to the client’s needs, so tight deadlines can be met. How important is regulation to corporate services providers? AR: Regulation is becoming more complex and clients want to deal with a local expert

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who can make sure they remain compliant. They don’t want the hassle of having to think about their corporate governance requirements in multiple jurisdictions, and would rather focus on their core business. So many clients have global structures and want to work with one service provider globally. They need someone who provides an understanding of local dynamics and expectations, with full attention to the compliance requirements. Importantly, post-financial scandals such as the Paradise Papers, clients are looking to move from less well regulated jurisdictions to the more highly regulated centres such as the Channel Islands. And we’re starting to see a growth in clients relocating their entities to the islands. GDPR is a relevant topic at the moment

The beauty of what we do is that we free up the client’s time, so they can focus on their own core business activities to make their business thrive

within the industry, but particularly for Jersey, because entities that are deemed to control data must register with the Jersey Data Protection Authority. MMcN: Given how well regulated Guernsey and Jersey are, our infrastructure gives confidence to companies that place services here. It’s a safe pair of hands – and that’s contributed to the flight to quality. Clients want attentive, professional providers who insist on accounts being done and paperwork completed properly with full audit trails. AR: There’s definitely less risk here. Even in the UK, corporate services isn’t regulated by the financial services regulator. In contrast, our regulators don’t allow us to set up companies and then deal with the Know Your Customer (KYC) later. We properly assess the risk before we take on business and, where necessary, we put mechanisms in place to manage that risk.

MMcN: For some clients, having a professional corporate services provider helps mitigate their risk because their corporate governance and documentation is being verified correctly. Why is good governance important? AR: When it comes to an action, such as the raising of capital or an initial public offering, all of the company documentation will be thoroughly scrutinised. Therefore it’s important that everything has been properly documented and recorded. It’s the corporate administrator’s responsibility to ensure that decisions are made by the board, not just by one director, that these decisions are properly documented and that full and thorough records are kept. Are there innovations taking place in the corporate services sector? MMcN: Yes – for example, we’re developing a new global client portal that will cover all jurisdictions, including those where we use third-party service providers. Clients want to consolidate service providers globally and this portal will allow them to see all the key corporate and statutory data in one easily accessible and secure online platform. What challenges do you face within corporate services? AR: Keeping on top of increasing regulation is a continuous challenge, but one that we rise to with the help of our global compliance team. MMcN: There are so many more reporting requirements nowadays, with initiatives such as FATCA and CRS. These make life more complicated and challenging for clients, but we’re here to help. And what about the future? AR: On the corporate side, industry consolidation ties in with clients wanting services in multiple jurisdictions. So there will be fewer but bigger providers in the market and, for that reason, at Intertrust we’re ensuring that we innovate and keep ahead of the market n

FIND OUT MORE

For more information on Intertrust’s corporate services offering, please contact Alice Read, Head of Corporate Services in the Channel Islands, on +44 (0)1534 504000, email alice.read@intertrustgroup.com, or Marie McNeela, Director – Corporate Services, Guernsey, on +44 (0)1481 211000, email marie.mcneela@intertrustgroup.com. Intertrust is regulated by the Jersey Financial Services Commission and licensed by the Guernsey Financial Services Commission.

july/August 2018 39

Infrastructure

Laying the

foundations Words: Richard Willsher

pr oj ec ts W it h m aj or in fr as tr uc tu reor ld , sp ri ng in g up ar ou nd th e w ay in g a th e Ch an ne l Is la nd s ar e plsu re th at si gn if ic an t ro le in m ak in g th ey ar e w el l fu nd ed

40 july/august 2018

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Infrastructure

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The big state pension funds in the UK, Canada, Korea, US and Australia like Infrastructure funds because they’re asset-backed and produce predictable, steady income streams

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WHAT DO THE National Grid’s UK gas pipeline network, hospitals in Africa, and sewerage and water treatment plants in the US have in common? The answer is that they’re all financed through infrastructure investment funds that are domiciled in the Channel Islands. And it’s very big business indeed – with massive projects in need of construction and maintenance around the world, and a tidal wave of money keen to fund them. The numbers are staggering. In order to meet the infrastructure needs of a projected global population of around nine billion people by 2040 – just 22 years from now – the World Bank forecasts $97trn in investment will be required. This includes meeting the United Nations Sustainable Development Goals that aim to provide universal provision of clean water, sanitation and electricity to people around the entire world. The World Bank also reckons there will be a funding shortfall of $18trn. This is where the need for private investment capital is particularly important and where infrastructure investment funds have a critical function to perform. They play the role of platforms where capital is raised from investors by fund managers who deploy it to fund major projects. Macquarie Infrastructure Corporation, for example, has raised a series of funds that have invested in airports, seaports, and power and energy facilities. iCON has several funds that have invested €2.5bn in water, transport, energy generation, storage and distribution assets across Europe and North America. And Abu Dhabi fund manager Mubadala Infrastructure Partners invests in a variety of infrastructure and development projects in the Middle East, North Africa and Turkey. These are just three of the largest infrastructure fund sponsors whose funds were structured through the Channel Islands. There are quite a few more. On the funding side, there’s great investor interest in infrastructure, as David Crosland, a Partner and infrastructure fund specialist at law firm Carey Olsen in Guernsey, explains. “Infrastructure funds are particularly popular with pension funds. The big state pension funds in the UK, Canada, Korea, US and Australia like them because they’re asset-backed and produce predictable, steady income streams.” Investors such as pension funds, insurance companies or sovereign wealth funds typically have long-term obligations to meet, such as paying pensions to private individuals. They look for income from the funds in which they invest that stretch over years, in some cases decades, to match such obligations.

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Infrastructure And, of course, projects involving large capital investments in power generation and delivery, airports, hospitals and public transport assets, which have long, useful lives, will often be state-supported and form the vital infrastructure backbones of the countries in which they are located – the UK National Grid, for example. The match between such infrastructure and institutions makes a good fit.

WHY THE CHANNEL ISLANDS? Although modest in their own infrastructure needs, Guernsey and Jersey play a pivotal role in achieving the match between projects and capital. Darren Bacon, a Partner at law firm Mourant Ozannes, sets out the reasons for this. “We have modern, flexible company law. We typically have limited partnership structures that tend to allow funds to pay dividends. We have a stable economic environment. We have economic and political and fiscal stability. “There’s a lot of noise around tax and offshore,” he continues. “But the reality is that all these funds are structured through [the Channel Islands] so that they simply don’t pay additional tax. The investors and the managers pay tax but the fund vehicle itself isn’t taxed repeatedly on the same investment.” The islands’ law firms work closely with corporate fund administrators to run the funds once they’re set up and deployed in projects around the world. Jersey-based Hawksford is one of these firms, and it also has operations in the Far East, underlining the global nature of the infrastructure funds business. Hawksford Client Director Daniel Hainsworth explains that his firm is seeing increasing interest in infrastructure investment from investors, including high-net-worth individuals, in the Middle East and Far East. He says the global infrastructure market is growing apace. “I was at an annual infrastructure conference in Berlin recently and you can see how it’s grown,” he says. “It started off eight years ago with 20 people in a room

talking about infrastructure. It’s turned into an event now attracting between 3,000 and 4,000 attendees. If you look at infrastructure as an asset, it’s an alternative asset and one that’s becoming more and more attractive from an investor’s perspective, but also more required by developing countries.” He highlights renewable energy assets in emerging markets that he believes will attract greater asset allocation in the future (see below). “This is a market that’s only going in one direction, and that’s growing.”

STRUCTURE AND THE MARKET Although the market is booming, Carey Olsen’s David Crosland strikes a more cautious, practical note. “There’s huge demand for infrastructure investment and also huge investor interest in infrastructure funds, but we need to make sure they have the environment at ground level to invest in infrastructure. “It’s about certainty over the rule of law and respect for assets. Public and private capital has to have the means to be channelled into infrastructure projects in

Public and private capital has to be channelled into infrastructure projects in various markets, And that’s what Jersey and Guernsey do well

various markets, and that’s what Jersey and Guernsey do really well. The islands have a key advantage over Europe now in the establishment of these funds.” Crosland also points to The International Stock Exchange (TISE) – which is based in Guernsey and where fund sponsors can list debt – as another important tool. “We’ve listed a lot of infrastructure debt on TISE in the form, typically, of bonds or loan notes,” he says. “You need to have a variety of tools available for infrastructure funding. What Jersey and Guernsey do well is provide a lot of options in a well-regulated, transparent environment.” Since the start of this year, however, there’s been somewhat less deal activity, according to Mourant Ozannes’ Darren Bacon. “There have been fewer projects being acquired,” he says. “But that’s a consequence of a lot of funds having been raised already. People are trying to invest that money at the moment and also a lot of people are chasing the best deals, which have become expensive.” However, he sees it as a cyclical market condition that will pick up again once existing funds have been invested and new fund raising accelerates again. “From a Guernsey perspective, we’ll continue the way we are,” says Bacon. “We’ll just keep doing what we’re doing. I’ve got no reason to think otherwise and we’re seeing quite a lot of activity. “And as we do more deals in North America and Asia, there are options for us beyond the UK and Europe, though the relationship is, and always has been, close with London as our nearest capital market. This all looks positive for the islands.” n RICHARD WILLSHER is a freelance finance writer

Infrastructure hot spots When Basalt Infrastructure Partners closed its second infrastructure equity fund in February, it announced total investor commitments of $1.28bn. Two of its four investments will be in Detroit Renewable Energy and a portfolio of solar energy assets in Italy. Renewable and sustainable energy projects are a key trend that Daniel Hainsworth, Client Director at Hawksford, sees as ripe for growth. This embraces, for example, solar and wind farms in

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the UK, Germany and elsewhere. Meanwhile, although there’s a considerable demand from western countries for injections of private capital into infrastructure developments, in the longer term, emerging markets offer huge scope for infrastructure growth. Consequently, projects in Latin America, Asia and Africa look attractive because they offer western institutional investors scope for portfolio diversification. At the same time, they also attract Middle

Eastern, Far Eastern, African and Latin American investors to invest in projects in markets where they may have a good handle on the geopolitical and economic conditions that mark out the territory where projects are located. Looking forward, renewables and emerging market infrastructure projects are well starred for growth – particularly because emerging markets have the greatest need for infrastructure and often lack the fossil fuels to power their growth.

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Wealth

Where there’s a will… Not everyone decides to leave their estate to their spouse and children – indeed, inheritance can often be a messy business. So just why do people decide to disinherit family members, and what can be done about it?

DRAMATIC ENDINGS ARE no stranger to the Lucan family. The moustachioed Lord Lucan famously vanished after allegedly murdering his children’s nanny at his London home in 1974. His fate has been the stuff of legend for over 40 years, with all sorts of stories having done the rounds, including that he drowned himself, was fed to a tiger, or is still in hiding protected by rich friends. His wife, Veronica, the Dowager Countess of Lucan, died last September after a drink and drugs binge sparked by a mistaken self-diagnosis of Parkinson’s disease. However, this wasn’t Lady Lucan’s final gesture. That came earlier this year

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for a variety of reasons. “There may have been a family dispute, a parent might disapprove of one of their children’s choice of wife or husband or their lifestyle. Maybe they want to provide for children of a second marriage who need money more. We’re also seeing high-net-worth individuals more frequently wanting their children to make their own way in life and not being reliant on their parents’ wealth.”

LEGAL MATTERS Under the Inheritance (Provision for Family and Dependants) Act of 1975 in England and Wales, individuals being disinherited can challenge a will after death. Current and former spouses and civil partners, children, step-children and co-habitees can make a claim on the grounds that the deceased failed to make reasonable financial provision for them. They can change the will to make it more generous

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Words: David Craik

when it was revealed she’d cut her three estranged children out of her will because they “lacked good manners”. Instead, she gave her estate – worth £576,626 – to homelessness charity Shelter. According to Anna Gaston, Associate at private wealth law firm Maurice Turnor Gardner, under English and Welsh law people are entitled in their wills to leave their property and possessions to whomever or whatever they choose after they die. There’s no requirement to make any testamentary provision to a surviving wife or child. “The majority of people want to leave their assets to their family after death, but it’s not so uncommon for individuals to leave them out completely from their wills or give them a reduced portion,” she says. “Instead, they give their estate to other people or, like Lady Lucan, to charity.” Gaston explains that people disinherit

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Wealth

to them, receive financial provision as is necessary for their maintenance, or have the will made invalid. The Court will weigh up a number of factors such as the needs of the disinherited, their own financial position and the size and nature of the estate. They will also look at whether there was ‘undue influence’ made on the testator when writing their will or if they didn’t understand the effect of their will because of incapacity. A testator can’t put a clause in his or her will that excludes the 1975 Act, but can state that if a claim is made, any financial provision made to the beneficiary will be forfeited. Or, as Gaston explains, if, like Lady Lucan, they want to bequeath their money to charity or to someone else, they should leave a detailed note or letter “explaining why they’ve made their decision and what links they have to that person or charity. Your views will be taken into account”. Gaston urges people to make their views known to their family before death to lessen any shock. “If they aren’t happy, they can’t change the will. If they think you don’t have the mental capacity to write the will then they can go to the Court of Protection or ask the power of attorney to step in. But these are big steps to make,” she says. “Most challenges are made for emotive rather than financial reasons. If you challenge, you might see any money you have, or are claiming for, eaten up by large legal fees.”

THE CHANNEL ISLAND POSITION Guernsey has a similar law to England and Wales in that testamentary disposition applies. It’s only a recent right, however, with a 2011 Act replacing the existing forced heirship system. That system, also known as legitimé, still exists in Jersey. It splits a deceased person’s assets into estates. The first is immovable, which includes property; the second is movable, which incorporates cash, shares, bonds and other assets such as paintings or cars.

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Letting your spouse or children know of your wishes before disinheriting them in your will can help to mollify the impact after your death

A spouse or child is entitled to claim up to twothirds of the moveable assets even if they haven’t been declared in the deceased’s will. The remaining third can be left to whomever the deceased chooses. If the deceased has no spouse or children, they again have the freedom to give their assets to whomever or whatever they wish. Immovable assets don’t come under legitimé rules. “If she was domiciled in Jersey, Lady Lucan wouldn’t have been able to disinherit her children,” explains Alexa Saunders, Partner at Carey Olsen. “She would have been able to draw up a will declaring that she wanted to leave all her money to charity, but if her children made a claim within a year and a day of the probate application, they would by law be entitled to their share. Often kids or spouses don’t choose to challenge and just accept their parents’ wishes.”

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Wealth

Strange and unusual disinheritances

Victoria Grogan, Counsel and Probate Manager at Ogier, adds: “Individuals can put a side note in their will stating that although they realise it isn’t in accordance with legitimé, they hope beneficiaries recognise their decision.” Disposing of assets into trusts during their lifetime, or by gifting, could, in theory, help an individual avoid forced heirship rules as they won’t form part of the estate after death. However, courts will look at the motivation behind setting up the trust or gift, and if their sole purpose is to defeat forced heirship then they could be set aside. Grogan explains: “If set up for the sole purpose of defeating legitimé, it may be possible for beneficiaries to make a claim for the money that’s been moved out of the estate. However, it’s a grey area.” Another potential way around legitimé is to change domicile or, says Sarah Hope, Chartered Legal Executive at Voisin Law, to put money into foreign trusts or more of an individual’s assets into property. Jersey is contemplating reforming the legitimé system and even embracing England and Wales law. A consultation was sent out to legal professionals on the subject last December. “It’s not the first time it’s been reviewed and it’s a slow-moving process. Some people want more freedom of choice, but others believe it’s important that kids and spouses are looked after,” Alexa Saunders explains. Hope believes such a move could be part of Jersey’s attempts to “make itself more attractive to high-net-worth individuals to invest in and live here. Some people, however, want to retain our roots and believe there’s some certainty to legitimé. “In England, a range of dependents – even mistresses – can claim, and it’s up to the court to decide on the sum they are given”. As with much in family life, making your will a stress-free affair after death comes down to communication. Letting your spouse or children know of your wishes before disinheriting them in your will can help to mollify the impact after your death. A discussion can then follow, which could help soothe or repair broken relationships or misunderstandings. This could lead to a change in the will or an acceptance on the beneficiaries’ side that the decision has been reached with sound intentions. Disputes over wills are more often driven by emotions than finances. Understanding that aspect of your decision-making can help your death be remembered for good times past rather than bitter recriminations into the future. n

Jessica Mitford: One of your daughters, Diana, marries British fascist leader Oswald Mosley. Another, Unity, becomes a close friend of Adolf Hitler. But you decide to disinherit another daughter, Jessica, who, against your own Nazi political leanings, decides to become a communist and fight in the Spanish Civil War. Even worse, she marries a member of the Churchill family. This was the decision of Baron Redesdale, who in his will – he died in 1958 – instructed his solicitor to insert ‘except Jessica’ after each bequest.

Joan Crawford: When the Hollywood actress died in 1977, she disinherited two of her children, Christina and Christopher. “It is my intention to make no provision herein for my son Christopher or my daughter Christina for reasons which are well known to them,” she wrote.

Leona Helmsley: The hotel heiress, who died in 2007, made her dog, a Maltese called Trouble, her biggest beneficiary, with a $12 million trust fund. Two of her grandchildren were disinherited. Trouble flew by private jet and lived in luxury in a Florida hotel until its own death.

DAVID CRAIK is a freelance finance writer

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july/August 2018 45

ADVERTORIAL FEATURE

Part three: What a trustee must consider before investing for the long term Jersey Charity investment series by Joel Graves, CFA, Investment Management, Smith & Williamson International Limited Smith & Williamson employs 170 investment professionals and is one of the UK’s largest independent financial services firms, unique in the market as a combined tax, accountancy and investment services provider. Smith & Williamson has around £19.5bn of funds under management and advice of which around £1.9bn is for charities (as at 31 March 2018). Joel Graves, CFA, is the Charities’ Investment Manager in the Jersey office. This is the third in a series of investment policy guidance papers for Jersey Charities. The introduction of a new charities law in Jersey, the Charities (Jersey) Law 2014” (“the Law”) and the appointment of Jersey’s first independent Charity Commissioner including the establishment of a tribunal to be known as the Charity Tribunal, is aimed at supervising Jersey registered charities and associated parties, and is designed to bring about radical change within the sector. The Law and related changes are designed to help the charitable sector flourish over the long term, in the process instilling confidence in the sector by introducing standards and clear accountability. For a Jersey charity, this means that associated parties, i.e. trustees, governors need to carefully consider their activities and responsibilities in relation to assets under their supervision. “The Law and related changes are designed to help the charitable sector flourish over the long term, in the process instilling confidence in the sector by introducing standards and clear accountability.” Our previous papers in the series have provided guidance on Cash Reserves policies and how to prepare an Investment Policy Statement (“IPS”). In this third article we discuss the factors and decisions trustees must take when deciding where and how to invest those funds that need to generate a return for

the charity. Trustees need to balance the goals of preserving donor capital, making that capital grow or generate an income, maintain liquidity should the unexpected happen, and managing the risks whether they be risk of loss, reputational factors or materiality of one investment. Preservation of capital in real terms: It is all well and good establishing a cash reserves policy and an investment policy statement outlining appetite, goals and restrictions. However, charity trustees often tell us that they feel stuck between a rock and a hard place when it comes to investing. It is very tempting to sit on cash, however the impact of inflation (the reduction in buying power of your money) will very quickly erode the value of any assets which are kept in cash, especially given the very low interest rates that most banks currently offer. Consider that £100,000 held 20 years ago has the purchasing power of £57,255 as at the 31 December 2017 which equates to a 43% loss or circa 3% loss per annum due to inflation. On the other hand, capital invested via an investment product, fund or investment manager is also very much subject to risk through fluctuations as markets move. Equity markets could conceivably fall by over 50% in a year (e.g. maximum drawdown on the FTSE All Share in 2008 was 45.6% although this has now more than recovered). Adopting the wrong strategy or being forced to sell at the wrong time can permanently impact a charity’s grant making capabilities. Achieving capital preservation in real terms (i.e. after the effects of inflation and investment costs have been factored in) is therefore a key consideration when looking at long term endowments.

“Achieving capital preservation in real terms (i.e. after the effects of inflation and investment costs have been factored in) is therefore a key consideration when looking at long term endowments.”

Liquidity: Trustees need to also ensure that the assets in their charge are sufficiently liquid to allow for distributions in any environment, your investment policy needs to be flexible in order to adapt to changing economic and market conditions. Illiquid or ‘locked in’ investments can prevent any ability to react to market circumstances and lead to unsuitable portfolios in ‘riskoff’ environments. Furthermore, wide trading/transactional costs will reduce portfolio performance over the long term, with the cost of investing creating a drag on returns and a need to take more risk.

“Trustees need to also ensure that the assets in their charge are sufficiently liquid to allow for distributions in any environment.” Risk: We all invest to make a return, but what is critical is investing the funds in the correct proportions, in line with the correct risk tolerance profile and matching with the investor’s time horizon or need to access the capital. Defining the risk appetite and assuming an acceptable level of risk is critical for trustees but also difficult to do in practice. It is understandable that a board of trustees might make a decision like leaving all the funds in cash deposits, or using a significant amount of the funds to be invested into a property. However, the ‘concentration risk’ of doing this can mean it is an inappropriate investment strategy. Cash deposits in a bank account assume the credit risk of the financial institution holding it, and are subject to the effects of inflation. A direct holding of property is tied to one location and as such, very concentrated and illiquid with high transactional costs. One company shareholding or equity investment is subject to decisions of one management team or one earnings profile.

ADVERTORIAL FEATURE

A trustee should seriously consider whether investing a significant amount of charity funds in one asset type (such as property) or asset class (a bond) meets the risk profile and time horizon (this includes cash deposits). Trustees need to give very careful consideration to whether their original donors expected their funds to be used in this way, whether the investment skillset will disappear as trustees come and go, and how comfortable they are with the materiality of one investment to the overall asset pot.

“Trustees need to balance the goals of preserving donor capital, making that capital grow or generate an income, maintain liquidity should the unexpected happen, and managing the risks whether they be risk of loss, reputational factors or materiality of one investment.”

The majority of well governed charities with long term capital appoint third party professional investment managers to undertake investments for a proportion of their assets in line with a strict investment policy, typically with the support of an experienced investment subcommittee or a third

party consultant. Funds are invested in diversified portfolio(s), that meet the charity’s aims and ambitions, risk profile, time horizon and ethical beliefs. A diversified portfolio is a portfolio constructed of various investments and assets with different risk levels and market values that react differently in changing economic conditions. These portfolios take into account the charity’s other risks and income requirements or periodic drawdown requirements. The portfolio should be dynamic and flexible as circumstances change for the charity, and finally should not be concentrated in one particular asset or investment. The typical investment aim of such an appointment would complement an existing cash balance and provide a return in excess of inflation (over the longer term, perhaps five years). In conclusion, trustees must take into account various factors when deciding where and how to invest the funds that have been allocated for the long term.

Trustees do not need to be investment experts but they have a responsibility to understand and review regularly the different facets of the Investment Policy Statement (see my previous article on constructing an IPS) and be cognizant of the different risks that affect long term funds (concentration risk, inflation risk, illiquidity risk etc…). Finally, if required, trustees must be willing to bring in external expertise. The Channel Islands are served by some outstanding investment individuals that are able to aid trustees in ensuring funds are invested in the most appropriate way given the risk profile and time horizon.

Joel Graves Investment Manager t: 01534 716823 e: joel.graves@smithandwilliamson.com

Joel has been supporting clients with complex investment structures for over 10 years and is supported by an extensive network of 170 colleague analysts and investment managers who manage around £19.5bn (as of 31 March 2018). Joel is a holder of the Chartered Financial Analyst (CFA) designation and a member of the Chartered Institute for Securities & Investment (CISI), and teaches the highly regarded CFA qualification to Jersey students in his spare time.

Important information Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.

Smith & Williamson is an independently owned financial and professional services group with around £19.5bn of assets under management (as at 31 March 2018). The firm is a leading provider of investment management, financial advisory and accountancy services to private clients, charities, professional practices, entrepreneurs and mid-to-large corporates. The group’s c1,700 staff operate from a network of twelve offices: London, Belfast, Birmingham, Bristol, Cheltenham, Dublin (City and Sandyford), Glasgow, Guildford, Jersey, Salisbury and Southampton.

smithandwilliamson.com By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing. The tax treatment depends on the individual circumstances of each client and may be subject to change in future. Smith & Williamson International is regulated by the Jersey Financial Services Commission. Smith & Williamson Investment Management LLP Authorised and regulated by the Financial Conduct Authority.

Philanthropy

The Channel Islands have a long track record in philanthropy, but will the creation of a Charities Register in Jersey take that one step further? across the globe, deciding whether and how to engage with philanthropy is an important and highly personal matter. For some, it’s enough to donate time and money to established and well-known charities such as Oxfam, whereas others prefer to establish new structures. It’s an area of interest that’s growing rapidly. According to UBS’s Global Philanthropy Report released earlier this year, almost three-quarters of identified foundations have been established in the past 25 years. It also cites a total of $1.5trn in global philanthropic assets and $150bn in annual philanthropic expenditures. By anyone’s reckoning, that’s a considerable amount of money going to worthy causes. For those interested in establishing their own structure, the Channel Islands have long had a presence in philanthropy, mainly through trusts and foundations. As Zillah Howard, Partner at law firm Bedell Cristin, explains: “Trusts and foundations can be established for purposes that are technically charitable or for purposes more broadly philanthropic. This is important, as it means that a

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philanthropist can set up a structure to support causes he or she is passionate about, whatever they might be.” Both trusts and foundations offer a measure of flexibility, which means individual philanthropists from wherever they are in the world can create structures on a bespoke basis, tailored to support particular causes that they are passionate about. They can choose the option that best suits their requirements, including the amount of control they want to retain over where the money goes. As you’d expect, the projects supported vary both in scope and focus. Howard cites the example of an international entrepreneur who established a Jersey law trust to provide donations to selected charities across the globe. Natasha Kapp, a Partner in Carey Olsen’s Trusts and Private Wealth group in Guernsey, says: “The island attracts philanthropists who want to set up private structures, mainly aimed at social impact and social development projects. These are often worldwide projects or a number of projects in various areas. The Guernsey foundation and other structures sit

underneath it to serve specific charities or projects set up in various countries.” Kapp’s clients come from all around the world, including Bermuda, the US, South Africa and China. What’s more, the sums involved can be huge – there’s in excess of US$2bn in one single structure alone.

REAPING THE REWARDS Kapp is clear on the main benefits of using Jersey or Guernsey. “Both islands are highly experienced in administering high-value and complex structures,” she explains. “This same wealth of experience in the commercial and for-profit sector is what the clients desire to be applied in administrating charitable and philanthropic structures.” She adds that the relative ease of setting up a structure from regulatory and tax perspectives is also attractive. According to the Jersey Financial Services Commission (JFSC): ‘Jersey provides a tax-neutral environment for running philanthropic structures. Certain structures are exempt from income tax and goods and services tax (GST) in Jersey, provided they meet the requirements that have been set out in

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FOR MANY HIGH-net-worth families

Words: Chris Menon

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Philanthropy

Extending another helping hand www.blglobal.co.uk

july/August 2018 49

the Charities (Jersey) Law 2014.’ Political stability, a well-respected and independent judicial system, not to mention a central time zone and close proximity to London are further factors making the Channel Islands attractive jurisdictions. Exact figures for the number of philanthropic structures set up in the Channel Islands aren’t easy to come by, but the JFSC says the number of foundation structures registered in Jersey grew by nine per cent to 269 in 2017. Moreover, its spokesperson adds: “Anecdotally, the finance industry estimates that around two-thirds of these foundations are established with a philanthropic purpose.” Jersey has £400bn in trusts established by private individuals, according to figures from Capital Economics – and while it’s unclear how much of this will be for philanthropic purposes, some of that money will be used for good causes.

CHARITABLE CAUSES On 1 May, Jersey introduced a Charities Register, which stipulates that to be considered a ‘charity’, a philanthropic venture must also deliver a public or community benefit (see right). There’s been much talk about how the register will increase the amount of philanthropic work in Jersey. Understandably, the JFSC is upbeat, saying: ‘The introduction of a Charities Register is part of a series of innovative legislative enhancements which will bolster our jurisdiction’s reputation for globally focused philanthropy and cement our position as a forward-thinking centre for private wealth management.’ Certainly, Carey Olsen’s Natasha Kapp believes that it will make a difference. “Charities and philanthropies often want a public profile and legitimacy associated with a register,” she says. Jo Le Poidevin, Executive Director at the

Foundations and trusts offer flexibility – so philanthropists can create structures on a bespoke basis

Credit: Association of Jersey Charities/Ace of Clubs

Philanthropy

Lloyds Bank Foundation for the Channel Islands, reckons the register will enable the general public to give to charities knowing where and how their money is being spent, but she does have some worries. “There’s concern among some small, local charities about the amount of work involved with the Charities Register,” she explains. “This won’t be an issue for larger foundations and trusts that have the capacity to deal with the registration and other requirements. But small charities may need support so they can successfully register and continue to fundraise to deliver the vital services and support to some of our islands’ most vulnerable, disadvantaged and excluded groups.” Perhaps it’s too early to know how great a difference the register will make. As Howard notes, it’s essentially just another option for benefactors to use. “The registration system introduced by the Charities Law is just one part of Jersey’s offering in relation to philanthropy, complementing the Trusts Law and the Foundations Law. It’s offering additional choice for philanthropists, enabling them to make the difference they want to make, in the way they want to make it,” she says. And where exactly does this leave Guernsey? Well, it already has a register, with an option for Guernsey non-profit organisations and charities to be registered – they have to be registered if they’re not administered by a local licensee. Moreover, Kapp states: “Guernsey will certainly be looking at whether there’s a desirability to amend its legislation and extend the concept of charity to make it more attractive for charities and philanthropies to be established in the island.” Clearly, the Channel Islands are already a very attractive option for high-net-worth families seeking to set up philanthropic entities, whether they qualify as charities or not. The hope is that the introduction of Jersey’s Charity Register will enhance this reputation. n CHRIS MENON is a freelance finance writer

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Jersey Charities Register Following reforms that had taken place in Scotland and England, Jersey made the decision in 2008 to examine how best to update its charity law. Consequently, under the Charities (Jersey) Law 2014, provision was made for a public register of charities and a ‘charity test’ as a condition of registration. As a result, from May this year, any entity must seek registration if it wishes to be called a ‘charity’ and enjoy, or continue to enjoy, the current tax exemptions. In order to meet the ‘charity test’, any entity must show that it has only charitable purposes and demonstrate how it intends to provide public benefit in giving effect to them. John Mills, Charity Commissioner for Jersey, explains: “It’s important and good to promote Jersey as a centre for philanthropic structures, but I want to be cautious about promotional linkage between that goal and the Charities Law if such structures aren’t in fact going to be registered under the law and may not meet the charity test. The corollary is that I would urge those responsible for such things to seek registration, which would put any possible concerns to rest.” Mills adds: “I’m somewhat nervous at the casual use of one word or the other – charity, philanthropy – seemingly interchangeably. What’s charitable may well be or usually also be philanthropic, but the reverse may well not obtain. They are different, or can be so, and philanthropic structures in Jersey for which charity registration may be sought will succeed in that only if their purposes are wholly charitable.” Nevertheless, he is still convinced that the Charities Law is “another strong weapon in Jersey’s armoury of global regulation, which is the best way to attract the widest possible range of international business”.

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Banking

Open Banking: a better tomorrow? Will the advent of data sharing between financial providers really make life easier for customers and small businesses?

Words: Chris Menon

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THE UK LAUNCHED its Open Banking initiative on 13 January this year, but most people, aside from those in the finance industry, seemed oblivious to it. But now that a little time has passed, it’s worth asking: just what is Open Banking, who might be affected and how? Put simply, Open Banking is a system of data sharing where a bank customer (consumer or small- to medium-sized enterprise) consents to sharing their banking data or financial information securely with third parties. It should also allow these bank customers to instruct authorised third parties to make payments on their behalf. So far, the nine biggest current account providers in the UK – Allied Irish Bank, Bank of Ireland, Barclays, Danske Bank, HSBC, Lloyds Banking Group, Nationwide, RBS and Santander – have been required to release their data in a secure, standardised form, which can then be safely and securely shared with third parties, such as apps and websites. Together, the nine banks are estimated to account for 85-90 per cent of UK current accounts. Although the 13 January deadline

was missed by five of the banks and Nationwide, they have now complied, aside from a couple of small banking sub-brands such as Santander’s private banking subsidiary Cater Allen, which received a year’s extension. At the moment, Open Banking only applies to personal and small business accounts, but it will be extended during the course of 2018 and 2019 to cover other online payment products, such as credit cards and e-wallets. The Competition and Markets Authority (CMA) brought in Open Banking with the intention of increasing competition and innovation in retail banking and financial services. There’s also a lot of support for these reforms from consumer groups, new and established banks and building societies, as well as fintech service developers. The requirement from the CMA coincides with the EU legislation, the revised Payment Services Directive (PSD2), which requires all EU payment account providers to provide third-party access. The main difference is that, whereas PSD2 requires banks to open up their data to

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third parties, Open Banking dictates that they do so in a standard format. A spokesperson for the organisation set up by the CMA to create software standards and industry guidelines for Open Banking explains: “In its simplest form, Open Banking makes account aggregation – viewing several accounts from different banks in a single app or website – easy. It should also make comparison services faster and more accurate because they can read your requirements directly from your account, rather than relying on you to fill in necessarily partial forms.”

OPPORTUNITY FOR INNOVATION While this explains how Open Banking could improve the services we already have, it may also make completely new services possible. For instance, Nationwide’s website says: ‘Imagine, for example, that an organisation develops an app that monitors your spending and you let it make payments on your behalf.

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It could then monitor your Nationwide current account and spot opportunities to save you money, such as clearing the balance on your credit card so you don’t have to pay interest. So long as you say yes, that organisation could even make that payment for you.’ The Open Banking spokesperson says it could even lead to UK consumers getting convenient, affordable advice. Instead of going through the hassle of filling in loads of forms, you’d simply allow a third-party account access and let them do it for you. “Open Banking should give everyone the kind of detailed, sophisticated financial advice that’s usually been the preserve of those willing and able to pay for it.” Further benefits might be that small businesses could automate routine filings of their accounts and it might make it easier for them to obtain overdrafts to grow their businesses. To achieve this potential, however, still requires a gargantuan effort from a

financial services industry not generally admired for its IT systems, integrity or skilful handling of consumer complaints. So is everything in the Open Banking garden rosy? Gareth Shaw, Money Expert at Which?, notes: “Open Banking has the potential to offer consumers more control of their finances and boost choice, but it also comes with potential risks around data privacy and security. Regulators and industry must ensure that customers are properly protected from data breaches and scams, which is vital if consumers are to use these services with confidence and trust.” There are safeguards for customers. Importantly, you don’t have to share your data if you don’t want to, and you can continue your bank arrangements as usual. If you do wish to share your data with a third-party provider, it will need your explicit permission before it can access your data. For example, once you give the provider consent to access your financial

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Banking

Banking data, it will send a request to the relevant bank. The bank will then check that the third-party service provider is authorised by the FCA. Assuming the provider is authorised, the bank will then share your data with the third party. You can revoke permission at any time. Of course, you’d still need to be on your guard, as it’s possible for third parties to get approval surreptitiously, as Katherine Hitchens, a Partner at law firm Babbé, explains: “Although you do have to give express consent for your data to be disclosed, this can still be tucked away in the terms and conditions of the third-party provider, so any such terms and conditions should be read carefully.” While she acknowledges that the consumer expressly consenting to data sharing “provides some legal comfort”, Hitchens questions whether the consumer would read the full terms and conditions before clicking on the ‘I agree’ button. “Even if they do read the terms and conditions, would they be able to fully understand them, especially if they contain specialist IT references or terminologies?” She adds. “One can but hope that the involvement of government bodies in the UK, such as the FCA and the CMA, to regulate the actions of banks and thirdparty participants in this market will provide adequate safeguards. If it doesn’t, customers will have recourse to the Financial Ombudsman.”

FUTURE DIRECTION Open Banking could herald much bigger changes in the future. Hitchens points out that in addition to the consumer benefits it could bring, it will also “radically change the competition landscape in banking as it forces banks to open up their traditional banking market to innovation and competition from non-banking entities”. Adam Riddell, a Director at Crystal PR,

Open Banking relies on trust, it’s crucial that its framework is sufficiently robust to ensure consumer confidence

firmly believes Open Banking is part of a much wider trend, as organisations realise that by embracing transparency they can effect positive change. “The UK is a leader in this – in 2015, it was one of only 17 countries to sign and formally adopt the six principles of the International Open Data Charter. We’re already seeing open data used in a variety of ways – Citymapper in the UK helps travellers plan journeys through real-time open data portals, for instance,” he enthuses. Ultimately, the success of Open Banking will depend on consumers trusting and using the system. Yet, there are inevitably going to be concerns around data privacy, security, and financial exclusion. Even regulated firms, where you’d expect the most rigorous security, aren’t immune from cyber attacks, as shown by the Equifax data breach. Moreover, bank account transactions include highly sensitive personal data about spending habits, political affiliations, medical care, family and friends. Katherine Hitchens also points out that Open Banking, while ensuring access to a wider group of service providers, won’t necessarily ensure that those providers offer them the best deal. However, she acknowledges: “In general, the increase in product comparison sites and software should help with price transparency overall”. Despite this, David Song, Principal, EU Personal Finance Policy at UK Finance, is optimistic about the future. “The changes could help to open markets that don’t yet exist and encourage new market entrants,” he says. “Some of these new entrants will offer services to assist those in financially vulnerable circumstances. We don’t yet know all of the opportunities that will arise as a result, but we could see huge benefits for customers.” Yet even he warns that all of these won’t happen overnight. “As with the FCA and other parts of the industry, we see that the development of Open Banking is likely to be a ‘slow burn’.” Certainly, Open Banking should encourage more competition in financial services. However, it’s a moot point as to whether the advances will come as quickly or be as great as some in financial services profess. n CHRIS MENON is a freelance finance writer

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Open Banking in the Channel Islands According to the Jersey Financial Services Commission, there’s no requirement for Jersey to adopt Payment Services Directive 2. Moreover, a spokesperson admits: “At this stage, the JFSC has not yet begun to consider whether it would be appropriate to adopt PSD2 or another similar legislative regime to require such Open Banking initiatives. We will, however, continue to monitor developments in this area, both within the EU and in other jurisdictions.” It’s a similar case in Guernsey. A spokesperson for the Guernsey Financial Services Commission confirms: “The issue of Open Banking has been much discussed in Guernsey – for example, it featured at the Commission’s 2017 Annual Seminar. Open Banking could be facilitated in Guernsey by the fact that retail banking here is dominated by the same UK clearing banks that are implementing Open Banking in the UK. However, Guernsey operates under its own laws and further work would be necessary to come to any conclusions about the implementation of Open Banking in [the island].” Nevertheless, Katherine Hitchens, Partner at Guernsey-based Babbé, expects international banks operating in the Channel Islands to be able to make such services available to Channel Islands customers in due course. As far as domestic institutions are concerned, she advises: “Care needs to be taken that the Channel Islands, as the UK has already done, provides participants with sufficient guidance and standards to be able to develop Open Banking here. “Given that Open Banking relies on trust, it’s crucial that its framework is sufficiently robust to ensure that consumer confidence is obtained and retained.”

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Investing

we’d all like to hit on the next big investment thing and make ourselves rich, but we’re more likely to get in late and lose our shirts – so why do investors jump on the wrong investment bandwagon?

WHY ARE WE, as investors, so susceptible to hype? We read endlessly about the need for diversification and balance in investment portfolios – and yet time and again money floods in to certain sectors, often after the clever money’s been made. Is it a case of investors chasing stellar returns and overlooking the risk? Or are they being suckered by fund providers throwing their marketing budget behind what’s in favour at any given time? Then there’s the get-rich-quick cryptocurrency bandwagon – seen by a vast majority as speculation rather than investment. There’s no shortage of warnings about chasing the money, so why do we repeatedly make the same mistakes in chasing the latest hot theme? According to Andy Prosser in Brooks Macdonald’s Investment Office. “In theory, there’s nothing stopping any particular

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sector becoming overvalued. Throughout history, there have been bubbles in tulips, shipping, railway companies, cotton, Japanese equity, technology stocks and real estate, among others.” Frances Watson, Partner at Mourant Ozannes, takes a similar line, but does see some common denominators. “All sectors are capable of hype, but where you have a new asset class, there’s more susceptibility. There’s far less historical data at hand to sufficiently weigh up the risks.” The tech boom of the late 90s and early noughties would be a prime example of this. A vast number of dotcoms with no track record of earnings had hugely inflated valuations based on the ‘potential’ of whopping great profits in a ‘new age’. Of course, potential itself is worth nothing – as many investors soon found out. To illustrate the carnage of the tech

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Investing

crash, you need look no further than the dramatic collapse of the techMARK 100 index. Created in November 1999 to make it easier for investors to spot fast-growing technology companies, the index hit a peak of 5,753 at the pinnacle of the dotcom boom, but by May 2002 had fallen below the 1,000 mark.

IMPULSE BUYING The speed at which these valuations rise creates a ‘must buy’ impulse that only serves to inflate prices further. “The sectors most susceptible to hype are those with inflated values and those with a novelty factor,” says Martin Bamford, Chartered Financial Planner with Informed Choice. “When a sector rises in value quickly, our brains trick us into believing they can only continue to rise.” When it comes to the new or ‘novelty’ element, consider the Dutch tulip mania of the 1630s, where rare variations of the tulip flower were prized so highly as status symbols that one single bulb was selling for the equivalent of a luxury house in Amsterdam’s most fashionable district. The tech bubble may not have hit the same levels of absurdity as tulip mania, but there was arguably the same wishful thinking based on a new phenomenon. Was there an element of greed in there too? Perhaps greed is too simplistic an explanation. Prosser suggests it was more a case of being afraid to miss out on what appeared to be a gilt-edged opportunity. “Investors see other people making money from a certain sector – like bitcoin or technology stocks – and they dislike the idea of someone else making money faster than they are. They also want to avoid the potential regret they’d feel by not investing and watching from the sidelines as prices continue to rise. “This fear of regret pushes more money into the sector, fuelled by the hopes of further ‘easy’ gains, and often without the necessary research on the investment or

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where you have a new asset class, there’s more susceptibility. There’s far less historical data at hand to sufficiently weigh up the risks

the risks being taken,” he continues. “All of this further fuels the bubble, until rationality eventually takes hold and the bubble bursts.” All of this begs the question: does the hype cause the sector to rise, or does the boom in the sector cause the hype? Justin Modray, a financial adviser with Candid Money, believes it’s a combination of the two. “Share prices might rise due to fundamentals, then investors jump on the bandwagon, pushing up the price beyond what’s probably realistic,” he explains.

MEDIA FRENZY The media is hardly blameless in all this. During the tech boom, newspapers were packed with stories about dotcom millionaires, and their personal finance sections full of features on how to make money out of tech – typically placed next to full-page advertisements of tech funds. Bamford believes marketing departments have a lot to answer for. “Marketers are very good at exploiting human emotions. They know what makes us tick and what will push our buttons, especially when it comes to the emotive subject of money. “If a particular fund provider needs to push their fund, then a decent sized marketing budget is all that stands behind investors and their hard-earned cash.” He agrees with Prosser’s point about the fear of missing out – and this has been especially apparent during the recent crypto-mania. “Anyone with half a brain cell can see that bitcoin et al have all of the attributes of a pyramid scheme. Yet the prospect of getting rich quick is too much to resist for some investors. “Others exploit this by selling the tools, courses and schemes needed to profit from cryptocurrency – they know they can make more by selling the shovels than selling the non-existent gold.” So, while the amateur investors are

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Investing

falling for all the hype, what about the investment professionals? Frances Watson believes that while fund managers might participate in the hype to make money, they are seldom sidetracked by all the media noise. “It has to be the professional investors who are creating the market. But they will realise it might be a bubble and have an exit strategy.” Andy Prosser agrees that the professionals are less susceptible to hype, but also that wisdom can desert anyone at any time. “Even some of the best and most famous thinkers in history have lost vast sums of money by falling victim to the latest fad. Sir Isaac Newton lost almost all his life’s savings when the South Sea Bubble burst in 1720, before allegedly complaining: ‘I can calculate the motions of the heavenly bodies, but not the madness of men’.” Almost all investing decisions are made by humans and nobody is immune to behavioural mistakes. But, as Prosser explains, professional investment managers do have the advantage of being able to observe market behaviour every day over a long period of time. That, combined with decades of academic research on the subject, makes them better placed to understand how human behaviour can feed into markets and affect asset prices. You’d think that, with all of the information and research available on the internet, personal investors might be able to make a more informed decision. But has the introduction of easy-to-access, online trading platforms been a curse rather than a blessing for those individuals? They can follow a trend and get in quickly, conducting little or no background research on the stocks they are buying. But it’s harsh to blame the online infrastructure for poor investment decisions. After all, as Watson stresses, platforms facilitate investment and that’s a good thing. And while technology allows the amateur investor to access a huge amount of information and analysis, it’s their decision whether to use it or not. Given that institutional investors make up roughly 80 per cent of total assets under management in the UK (according to the Investment Association), retail investors have far less of an impact on prices than institutions. Institutional investors may identify and intensify the hype by continuing to pump money into a trending sector – be it biotech, mining or telecoms – but they will often have a clearer idea when to leave the party. It’s often the amateur investor who fails to see the exit signs and takes the biggest hit when reality bites. Behavioural investing comes into play

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here. Along with regret aversion and the fear of missing out, humans also have the tendency to extrapolate recent returns and imagine they will continue further into the future, known as ‘representativeness bias’. As Prosser explains: “Persistently strong short-term returns can often tempt further inflows, on the misguided idea that those returns are more likely to continue further into the future. Rationality can sometimes take a back seat when faced with the notion of getting rich quick.” The fact that many fund management teams use an investment committee to stress-test a strategy gives them an advantage over the individual investor who may not have a sounding board other than social media – which often creates more noise and irrational thinking anyway. So how do you avoid the hype? Bamford suggests the answer is to create a plan on day one and then stick to it, regardless of what the markets do and what new opportunities come along. He concedes that as a financial planner, convincing clients to remain focused is

a tough challenge. “Choosing a suitable asset allocation model to meet future financial goals, and populating this with suitable funds, isn’t the hard part of the job anymore. Convincing investors to stay invested when markets are volatile, or calming them down when they’re tempted to invest in the ‘next big thing’ takes a lot more work.” n DAVID BURROWS is a freelance investment writer

how to Avoid getting sucked in ● If you’re buying on recent performance, take the time to understand what’s caused this and whether it’s sustainable. ● E nsure you’re comfortable with the risks involved – chasing high rewards usually means taking high risks. ● C heck the investment’s potential liquidity – can you get out in a hurry if need be? ● D on’t bet your shirt, only invest a modest part of your overall portfolio so a loss won’t wipe you out. ● I s the investment regulated by the Financial Conduct Authority? Unregulated investments offer little or no protection should things go wrong as a result of fraud or suspicious activity.

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BUSINESS LIFE

Business

From extreme weather, terror attacks and fire, to cyber attacks, hacking and human error, businesses are having to prepare, more than ever, for the unknown

How resilient is your business?

IT’S AMAZING HOW fast reality can be ripped open. Just ask the people of the British Virgin Islands. Up to 6 September last year, tourists were flocking to the island paradise, drinking rum punch, chartering yachts and generally having a blissful time. Then Hurricane Irma swept in. Winds raged to an average of 185mph, gusting to 215mph, smashing glass, tearing off roofs, even stripping the bark from the trees – leaving the island like a post-nuclear wasteland. Eighty-five per cent of the islands’ buildings were severely damaged or destroyed. The BVIs are, of course, not just a quiet island enclave, but an international finance centre. When you’re trying to punch numbers in the wake of the most powerful Atlantic winds ever to make land, the idea of ‘business as usual’ is quickly blown out of the window. Stephen Alexander is a Partner at Mourant Ozannes,

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Business

hurricanes may not be a day-to-day threat for most businesses, but the nature of increasingly global and connected businesses means there’s no shortage of other dangers

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one of many Channel Islands-based companies with offices in the BVIs. He recalls people’s disbelief at the destruction. “It was catastrophic,” he says. “The damage was to the tune of $3.47bn. The risks posed to our firm were multiple – our office space, the local infrastructure and the risk to human life.” Alexander is based in Jersey, but prior to that, in 2008, he was working in the Cayman Islands, and saw there how the area was still recovering from the storms that had flattened and flooded it four years previously. “Many firms went out of business in Cayman in 2004,” he says. “And I suspect many will now in the BVIs.” Hurricanes may not be a tangible dayto-day threat for most businesses, but the nature of increasingly global and connected businesses means there’s no shortage of other dangers. Some of those risks are physical – while only certain operations will be prone to extreme weather events, others may suffer terror attacks, fire or flood. Others are more hidden. Take the cyber threat – nation states, professional

hackers, your own team and your supply chain could all wind up causing you devastating problems you can’t even see. As Chief Digital Officer at Sure International, the Channel Islands’ telecoms provider, Justin Bellinger sees those cyber threats up close. The biggest culprits are directed denial of service (DDoS) attacks, he says, where nefarious elements direct impossible volumes of traffic towards a site to disable its servers – which could be crippling for an e-commerce business. Others face more subtle attacks. “We see phishing attempts all day, every day,” he says. “People targeting individuals to get them to click on a link – or leaving a malware-infected USB key in reception. “It’s terrifying, especially when you look at what being compromised means. The best case is your machine is harnessed as part of a botnet to attack someone else. At worst, your machine is locked and you have to pay someone in bitcoin to decrypt it.” We’re in danger of stoking the

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Business

towering pyre of fear here, but the risks don’t end there; they just get more abstract. Financial services companies now face greater regulatory risk – the danger of failing to comply to the ever-growing web of red tape covering everything from the financing of terror to data breaches. Under the new GDPR rules, for example, a data leak can trigger a fine of up to four per cent of a firm’s global turnover or €20 million, whichever is highest. “In the Sony Playstation breach of 2012, the company was fined $250,000,” says Bellinger. “If that had happened after GDPR, that may have been over $1bn.” And if these threats weren’t bad enough already, each carries a knock-on risk – of clients losing confidence in the victim’s ability to handle their affairs. In the bestcase scenario, that means dusting yourself down and learning a tough lesson. In the worst, it’s the end of your business. “The impact on reputation can be the most severe, and it’s long-term,” says Malin Nilsson, Managing Director of Duff & Phelps’ regulatory consulting team in Jersey. “Even if you can turn a problem around, your reputation could be so tarnished that clients and staff start looking elsewhere. Mossack Fonseca’s footprint declined right after the Panama Papers in 2016, lots of staff left, and the company eventually closed down. They paid the ultimate price.” Such stories help explain why, when faced with an increasingly complicated and connected world, businesses are realising they need to do all they can to mitigate risk. That means putting in measures to prevent the worst happening – as well as establishing plans for what happens if it does.

PROTECT YOURSELF Basic preventative measures include creating firewalls and other forms of internet security – or diversifying your locations and services, so that a problem in one area doesn’t affect others. One of the most important steps is to train staff, so they’re aware of potential threats and know to spot and report them. Bellinger believes there’s a reason phishing attacks are such an effective threat. “People are the weakest link,” he says. Passwords must be properly considered and sophisticated enough to deter hackers, desks should be kept clear, and valuable data shouldn’t be left unprotected on desktops, USB sticks or in good old briefcases. There are broader measures too,

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in an age where firms are increasingly reliant on IT systems and the internet, companies have yet to grasp the seriousness of cyber threats

including signing up to global standards, such as ISO 27001, which covers the protection of data – everything from physical protection of servers, such as barbed-wire fences, to back-ups and recovery plans. It’s proving increasingly appealing to clients – ISO 27001 gives them the assurance that a given provider has considered the finer details of data protection. And it means the accrediting body has already asked the company 50 pages of questions about its security, so it means they don’t have to. But response is just as important as preparation. Perhaps even more so. The critical consideration for any business is that, even if something unthinkable did happen, the service to clients continues almost as if nothing had happened. This could include running back-up servers in another jurisdiction, having a back-up broadband provision, or storing your data with a third-party provider. If you’re victim of a hack, you may want to remove your infrastructure entirely from the internet, in order to get some

containment; or you may want to stay connected in order to monitor the attack and gather evidence of it happening. But just as important as the facilities is, again, the human element. Plans have to be documented, reviewed and shared so that people know exactly how to behave. Who deals with media enquiries, for example? If something bad has happened, they’re bound to come asking questions. If you don’t get this straight, you may quickly find things slipping even further beyond your control. “We’re not geared up to deal with the stress of a hack or our business going down,” says Bellinger. “It’s basic human psychology. When we’re threatened, we go into panic mode, our fight-or-flight kicks in and our focus turns to a distance of 30 yards – spear-chucking distance. That’s entirely natural, so it’s critically important that we have all response procedures documented and tested so that we can respond.” The question is whether businesses are up-to-speed on all this. Teijo Peltoniemi is Head of Digital at KPMG in the Channel Islands, and in that role he regularly services both global and local clients in his speciality of cybersecurity and privacy. He believes that, in an age where firms are increasingly reliant on IT systems and the internet, companies have yet to grasp the seriousness of cyber threats. “Firms tend to have plans in place for operational risk, but don’t think of information security as part of that,” he says. “They need to raise the information security risk to board level. By considering it a business risk, not just an IT risk, they’d make it a more inherent part of their risk management.” Malin Nilsson echoes these concerns regarding the average company’s readiness to face the media. Companies could, of course, drive themselves mad trying to mitigate every possible risk. Bellinger cites one business that wouldn’t base its disaster recovery in the Channel Islands in case there was a catastrophic failure in the nuclear infrastructure in France. But while it would be naive to think a company can – or should – plan for every eventuality, companies simply can’t afford to bury their head in the sand and assume the unthinkable won’t happen to them. Nilsson sums up the issue succinctly. “Prevention is better than cure,” she says. “And it’ll cost a lot less.” n DAVE WALLER is a freelance business writer

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Business

Should your business dump Getting it right on social can be a minefield – and getting it wrong can be costly for businesses. So should you ‘do a Wetherspoons’ and drop it altogether?

IT WAS A sunny Monday in April this

year when JD Wetherspoon, the discount pub chain, dropped its bombshell. Not that it was selling a burger and a pint for £1, but that it was daring to do the unthinkable – ditch social media. Its outspoken Chairman, Tim Martin, made the announcement, citing the “current bad publicity surrounding social media, including the trolling of MPs and others”. With that, down went Facebook (100,000 followers) and Twitter (44,000) for the chain’s 900 pubs. Martin added that it was “becoming increasingly obvious that people spend too much time on Twitter, Instagram and Facebook, and struggle to control the compulsion”. That may sound rich coming from a chain selling cut-price booze from 8am, but his announcement does point towards another interesting question: do businesses have a social media problem that’s got out of control too. Adam Riddell, PR Director at Crystal PR, says the Wetherspoons decision is encouraging. “You hear a lot about how well social media works for a business, and some quite remarkable figures are thrown around regarding followers, likes and retweets,” he says. “But such vanity

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metrics can mean very little. What matters is seeing what they mean to your objectives. Here’s a CEO who’s come out and looked at what social media actually brings to his business and is taking a view. That’s quite interesting.” There must be plenty of other businesses out there using social media and still struggling to work out quite why. So, should they see Wetherspoons as leading them towards a brave new world beyond social feeds? Perhaps not.

STORY-TELLING TOOL Tara Thompson is a Senior Account Manager at That Lot, a London-based agency handling social media for everyone from TV channels and chicken chains to banks and B&Q. She points out that social media remains an effective tool for companies of all kinds. “If you’re Channel 4 and Nando’s, it’s very easy to employ clever joke-tellers and adopt a more approachable tone. We’ve had amazing numbers from Channel 4, which is now targeting more people than it would through TV ads. “But we work with banks and charities too. They may need a more delicate approach, but they can still tell a

captivating story and start conversations in a way that’s interesting and appealing.” These stories can be told in a number of ways. An insurance company selling policies to home or car owners has a clear market on social media. But so do those selling captive insurance or reinsurance schemes, who can target new markets via professional platforms like LinkedIn. Any company looking to deal with feedback effectively should at least consider social media – done well, it’s the quickest, most effective way to have a genuine twoway conversation with customers. Anyone looking to recruit in a competitive market like the Channel Islands should do so too. “Social platforms provide a good opportunity to show off your company culture,” says Chris Chilton, Managing Director of Operations at Orchard PR. “And this is owned media – you don’t need to convince a paper to run a feature on your grad scheme; you can make your own video and host it.” Or, of course, you could do a Wetherspoons. Tim Martin believes the company’s customers will fare just fine with its Wetherspoons News newsletter, its website, and by “speaking to the manager of a pub”. It’s hard not to see that as a

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Business

social media?

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Business refreshing strategy, and the chain certainly didn’t have to wait long before it was tested. A few weeks after Wetherspoons announced its social media blackout, it was back in the news again – customers were apparently furious that the chain had taken a third of its dishes off its summer menu without warning. If Wetherspoons customers really do get that wound up about hot dogs, it may have been useful to soften the fallout by making it into a conversation – at least the company didn’t have to deal with a load of flak on Twitter or Facebook, which is a genuine concern for many businesses. Another issue is that unforgiving followers so often jump on innocent mistakes. There are countless examples, the most recent being Thameslink. In May, a rail passenger tweeted a photo showing all the service cancellations, along with his twist on the famous old Ferrero Rocher advert: ‘With these services you’re really spoiling us’. Thameslink’s response was a swift apology with a sense of humour, conceding that the incident was less Ferrero Rocher,

If you leave an information gap, it will get filled – by conjecture and rumour. Or you can use social media to communicate your messages quickly

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more ‘Poundland chocolate’. Poundland quickly found out, of course, and sent a snarky response. And both companies duly ended up in the news. It’s all very silly and does make you question whether it’s worth all the bother. But social media also happens to be the best tool for controlling such fallout if it does happen. “If there’s a problem and you leave an information gap, it will get filled – by conjecture and rumour,” says Nichole Culverwell, Director at Guernsey-based communications agency Black Vanilla. “Or you can use social media to communicate your messages quickly and well. You can’t do that if you’re not on it in the first place.”

CHOOSING THE RIGHT PLATFORM There’s no denying that social media can be a tricky thing to get right, and that it takes time and resources. But it’s not enough to set up a Facebook page and then complain when it’s not doing anything. Success hinges on strategy. You have to know what you’re trying to achieve, and exactly how social media is going to help you do so. Are you trying to sell things, or show you’re an expert in a subject area? Each channel does different things. Instagram favours photos and video, LinkedIn gathers opinion. While a law firm wouldn’t use Facebook to promote corporate services, for example, it may want to use it to talk about its role in the community. “On TV, you wouldn’t put your ad on at 11pm during a film if you wanted to target kids,” says Chilton. “And you don’t target IT professionals with an ad in Horse & Hound. Where’s your audience and what are they looking at? If they want sneakers, they’re on Snapchat, not Facebook. If it’s corporate decision-makers, they’re looking at LinkedIn, not Instagram.” Only once you’ve answered the strategic questions – which you have to do whether you’re using social media or not – can you really start to think about delivery. “None of this is by accident,” says Culverwell. “It’s all research, content planning and creation; then implementation and measuring; then learning and changing and trying again. Social media allows you to do that. You can be constantly measuring and refining your approach. “In the old days of TV and print, we’d run an A campaign and a B campaign, and repeat the most successful one. That involved spending a lot of money. The technique is the same on social media – and results may come much cheaper and faster.” Both Culverwell and Riddell point out that social media is just one part of a wider communications strategy, one that takes in a mix of paid (paying to be on a platform), earned (editorial), shared (content spread among third parties) and owned (your own content platforms, such as websites, brochures and Wetherspoons News).

“It’s not about ditching social media,” says Riddell. “That’s too simplistic. There’s now an increasingly blurred line between traditional and social media. And business needs to be looking at this wider framework these days.” If you look at that framework and decide it’s not for you, you don’t have to take the Wetherspoons approach. “Surely anything’s better than deleting your account,” says Thompson. “Go rogue, go a bit crazy, and see what you can do with it instead.” n DAVE WALLER is a freelance business writer

Socially awkward Here are five telltale signs that you haven’t mastered social media. ou don’t actually 1 Yknow who you’re talking to on social media, or why.

company is running 2 Yaour lot of social channels

without a coherent strategy connecting them.

put 3 Yanou’ve intern

in charge. Your social feeds will present your company to the public, so it’s not a job to be palmed off with no planning or supervision.

buried your head in 4 Ytheou’ve sand. If someone highlights a flaw in your service, you have to respond promptly. If you don’t, it’s a missed opportunity to appear onside with your customers at the very least.

ou’re on 5 Ysocial media

because you’re scared of what would happen if you weren’t.

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What’s going on in your head?

How a tricky little thing called ‘confirmation bias’ might not only affect the decisions you make in your daily life, but those you make at work as well, often at a serious cost

Words: Dave Waller

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beast. For one thing, it knows the value of not working too hard – it has a knack of unconsciously making certain decisions to save energy and time in its processing. Instead of embarking on a convoluted process of weighing up every facet of every decision, we often go in with an idea already in our head of what we reckon the right answer will be. But this has an unfortunate side-effect – confirmation bias, a common tendency to seek or interpret information in a way that confirms those preconceptions, and ignore anything that doesn’t tally with them.

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THE HUMAN BRAIN is a clever

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the stronger the initial opinion, the stronger the tendency to seek out confirmation and ignore disconfirming evidence

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It’s a common problem that crops up in more aspects of our daily lives than we might realise. Andy Prosser in Brooks Macdonald’s Investment Office sees it in investment decisions all the time. An investor will often anchor themselves to an initial view and make the wrong choice – and afterwards, confirmation bias makes it likely they’ll stick with that choice, setting off what he calls a “vicious cycle of over-confidence”. “One academic experiment used a popular investing message board to test how the community influenced investors’ trading decisions and performance,” Prosser explains. “Researchers found that investors who were most likely to seek out supporting opinions and ignore contradictory evidence were also the most likely to make mistakes that ultimately led to lower returns on their investments. “It’s also been shown that the stronger the initial opinion, the stronger the tendency to seek out confirmation and ignore disconfirming evidence.” And consider the debate over gun control in the US. Let’s imagine someone called Steve who’s totally against gun control and believes in the right to bear arms. He will seek out news stories and opinion pieces that reaffirm the need for gun ownership. When he hears stories about shootings in the media, he interprets them in a way that supports his existing beliefs. Fighting mass shootings by selling more guns may seem like insanity to certain parts of society, but for Steve it makes perfect sense.

Aside from investment decisions and personal viewpoints, confirmation bias can also be found in the professional world. Stephen Alexander is a Partner in Mourant Ozannes’ Jersey litigation practice. While he sees confirmation bias at play in legal cases all the time, he’s seen its impact in business too, with “the risk that inferior business decisions are being made, and opportunities missed”. He cites an example a few years ago in the City, where a client was developing a new product. “The CEO of the company had this idea for the next big thing and he directed his team to conduct market research to explore feasibility,” he says. “Of course, the market research was tainted from the beginning and just confirmed the preconceived belief that the CEO had about the idea. Data wasn’t allowed to be objectively reviewed, everything was construed to fit his idea, and the whole product development process was launched regardless. “It was interesting to see the effect of confirmation bias in practice – people were directed as to what they should be doing, and this led to something inferior being brought to the market.”

BUSINESS MATTERS The majority of confirmation biases will crop up in small day-to-day decisions. Ernest Capbert, a business coach at Oxford Innovation, describes himself as “generally an open and very curious person who’s aware he doesn’t have all the answers”. But get him thinking about confirmation bias and it doesn’t take him long to spot it creeping into his work. He describes a two-day workshop he ran recently with 30 start-ups. “I’ve almost been obsessed with how to succeed as an early-stage business,” he says. “And my bias is that if you don’t get through that phase, where you’re a one-man band with no time or money and an unproven concept, you can’t actually create a business. “I wanted to prove this point and went trawling through global stats of earlystage start-up success. I discovered the failure rate was 60 per cent, but I found myself wanting it to be higher, just to really hammer the point home.”

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He jokes about how disappointed he was in his discovery, and how he almost said the rate was 80 per cent anyway. But confirmation bias can often be no laughing matter. Laura Haycock is a business psychologist at Pearn Kandola, working with large corporations and government departments on a range of people issues. A specialist in diversity, she’s seen first-hand how our confirmation biases can adversely affect people’s careers. “When interviewing someone for a role, or evaluating performance for a promotion, we get a gut feeling of how likely that person is to succeed, whether that’s a man, woman, someone older or from an ethnic minority,” she says. “Without consciously going through any thought process, we look for evidence that confirms our gut. And we may miss or ignore evidence there that contradicts that initial belief. Talented people may get left behind or excluded, while the wrong people manage to get higher up within organisations. Even to the top, potentially.” Haycock cites one experiment in which a law firm asked people to evaluate job applications from hundreds of different candidates. They used the same CV and simply changed the photo – sometimes a black person, sometimes white. “It found a

One toxic side-effect of our need for feeds is that they encourage people to congregate in silos that all think the same, reinforcing pre-held opinions

far smaller proportion of black candidates were invited to interview,” she says. “When reviewing black candidates’ applications, people were spotting more errors because they were looking to confirm the idea that this wasn’t the right person. “Someone from an ethnic minority might be subtly subject to that same bias day after day and get left behind as a result, not given the same opportunities, the benefit of the doubt or the chance to prove themselves. The added effect is that such people become disadvantaged and don’t progress. And as they’ll have fewer positive feelings about the organisation, they may get fed up and leave. Business then has the cost of higher turnover.” This problem may only be getting stronger. These days we’re bombarded by news and information 24/7. We like reading people whose opinions we agree with and are likely to attribute more weight to them than to those we don’t like. To that mix you can add social media. One toxic side-effect of our need for feeds is that they encourage people to congregate in silos that all think the same, further bolstering the habit of reinforcing our pre-held opinions, rather than challenging them – it’s the ‘echo chamber’ we often hear about. People feel increasingly right in how they see the world, and more isolated from contradictory views, because their friends, and the social algorithms, constantly throw up nuggets that fit their own perspective. In this environment, spotting your own confirmation bias can be incredibly hard to do. The worst thing for people is to maintain that they’re not biased. Because of how our brains work, we can’t be 100 per cent objective. “The more we deny our bias, the more likely it is to filter in and affect our decisions,” says Haycock. Instead, recognise that there’s a risk of confirmation bias, and introduce steps to minimise it. “A good decision-making process requires good supporting evidence,” says Andy Prosser. “But the presence of evidence that conflicts with your opinions is no bad thing either.” n

How to avoid confirmation bias ● Tune in to any uncomfortable feelings and dig into what’s driving the emotion. ● Be scientific. Look at the evidence – not just the information that confirms your gut feeling, but the aspects that contradict it too. ● Encourage debate. Gather alternative views around you and invite people to play devil’s advocate. ● Have empathy. Your biases may well affect other people’s lives, so put that person first, and see how that shapes your decision. ● Don’t start with loaded questions. When gathering data, remember that the questions you ask, and the method of getting answers, will have a big impact on your results. Approach it in an unbiased way. ● Have a team of people working on any big decisions, rather than keeping them all to yourself.

DAVE WALLER is a freelance business writer

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THE AGENDA

The Agenda is compiled by Businesslife’s Fashion and Lifestyle Editor, Thom O’Dwyer, with additional material by Danny Cobbs

goes all Riviera chic!

1. POSTER GIRL A well-designed poster doesn’t just look great on the wall, it can also prove to be a very sound investment. From film to travel, vintage posters of the last century have skyrocketed in value. So why not bring a little bit of ooh-la-la to your abode with this original 1935 travel poster? It was published by the Paris Lyon Méditerranée Railway to promote train travel services to the fashionable Côte d’Azur. By the well-known French artist Julien Lacaze (1886-1971), similar posters have sold at recent auctions for up to 66 per cent above estimate. We’re talking about real money on the wall here. Just be sure you buy from a reputable dealer, such as 1stDibs.com, where you’ll find the poster pictured here for sale, along with many others. It features this statue of a nude, but demure, young lady on a plinth carrying a large tray overflowing with lush flowers and greenery. The mise en scène of cypress trees and palms in the surrounding garden overlooks a scenic view of the French Riviera, with sailboats gently bobbing in the calm azure blue sea. An Art Deco classic. £1,750, www.1stdibs.com

INSIDE THE AGENDA: ACCESSORIES, ART, BEAUTY, CARS, DRINKS, FASHION, FOOD, FOOTWEAR, FRAGRANCES, FURNITURE, JEWELLERY Everything you need for a more stylish life

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THE AGENDA

2. LIFE’S A BEACH When it comes to soaking up the sun Riviera-style, designer labels are just as important on the beach at St Tropez as the outfit you’ll be wearing later when you sip a Kir Royale at Le Senequier. This is the chic café where the elite meet to people-watch and clock all the oligarchs’ yachts moored in the harbour. Créations Jean-Vier is a renowned top-end specialist manufacturer and weaver of cotton and flax home furnishings, located in the Basque region. Its luxe Grand Plage Olatura marine beach towel (pictured) is inspired by the 1920s Art Deco heritage of St Tropez, with its graphic recreation of sand, sea and sunshade parasols. The towel’s ultra-soft, super-absorbent cotton velour has also undergone an exclusive treatment that guarantees remarkable quality and longevity. Perfect after you’ve taken that gentle dip. £63.27, www.thedesigngiftshop.com

3. SHIRT TALES Born in 2009 and founded by Massimo Giorgetti in partnership with the powerful Italian Paoloni Group – following a two-year creative directorship at Pucci – MSGM is now a wildly popular fashion brand. Indeed, Giorgetti has grown it into a $45 million business. Not bad going for a guy who started out working in accountancy. Music and art are the designer’s greatest influences – he spent several years working as a DJ. It means a youthful, exuberant vibe is always centre stage at MSGM. This season, the men’s collection transports us to the French Riviera via California. The boxy shortsleeved pure cotton shirt, pictured here, is a perfect example of this season’s casually cool look. With its quirky surfer-meets-skater style combined with the abstract floral print, bold colours and loose relaxed shapes, this casually cool shirt is pure St Tropez. £365, www.farfetch.com

4. DISCO QUEEN Welcome back to the Summer of Love, ladies! The Rainbow Strobe Highlighter, pictured here, by cult makeup brand Too Faced is a cross between highlighter and glitter. It’s a kaleidoscopic all-over magic highlighter palette that’s the ultimate disco diva’s fantasy. For a true rainbow effect, pick up the product from left to right using the matching rainbow-hued flat brush, and apply in a single stroke. Or swirl the colours together for an effortless, all-over prism effect with a St Tropez sunset dazzle. You can also choose just one of the pastel stripes for a fresh, shimmering, modern eye shadow. The formula is infused with rose quartz powder to add some playful energy to your makeup. And the fresh, fruity, dreamy scent will enhance your ethereal night-time vibe. Founded in 1998 by cool dudes Jerrod Blandino and Jeremy Johnson, Too Faced is an innovative brand to watch if you like to play around with your makeup. Highlighter, £25; brush, £27, www.debenhams.com

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5. JUST HANGING OUT Bringing a bit of relaxed, outdoorsy summertime pizazz inside, this fabulous Hanging Rattan Bowl Chair from Out There Interiors – curiously named Elsa – is meant for indoor use only. Beautifully crafted in natural rattan, it’s a contemporary throwback to the early 1960s – the ultimate retro focus for any cool urban interior. You can just imagine Brigitte Bardot in her heyday, curled up in the iconic hanging chair, purring like the sex kitten she was. This gorgeously quirky chair will create a major talking point in any abode, and will certainly make any home stand out from the crowd. And, rest assured, when guests arrive at your pad, you’ll be able to take bets on who’ll win the battle to sit in the chair first. £540, www.outthereinteriors.com

6. THINK PINK On the French Riviera, rosé is everyone’s favourite tipple. It’s the perfect match to go with anything involving tomato-based Mediterranean dishes, especially the Côte d’Azur’s famous fish soup, Bouillabaisse. Miraval Rosé 2014, pictured, is a beautiful wine in an equally enchanting magnumsized bottle. It comes from the wine estate of the Château Miraval in the South of France – where Brad Pitt and Angelina Jolie married in 2014, and which they still own despite their divorce. This AOC Côtes de Provence has a soft blush colour and is beautifully bright. Delicious aromas of raspberry, peach and white flowers combine with the minerality and salinity of the clay and limestone soil typical of Provence. These signature features of the 2014 vintage give it a pleasing freshness. The rich complexity of the wine is well balanced with lingering flavours and plenty of character. Perfect for sipping and watching the world go by. £37.95, www.31dover.com

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7. PICTURE PURRFECT Once only worn for their sun-shielding properties, sunglasses have taken on a whole new status – that of a fashion staple. Shades of every description are now worn in fashionable nightclubs as much as they are on the beach. The sexy, superstar cat’s eye frame has become a mainstay in sunglasses design, and has been a St Tropez favourite since Brigitte Bardot turned the tiny fishing village into an internationally renowned playground of the rich and famous in the 1950s. Now, revered French luxury fashion brand Céline has come up with a slightly softer cat’s eye shape. Pictured here, the classic pointed frame was made in Italy and set with softly tinted lenses that will easily take a trendsetting girl from chic, elite private St Tropez beach club Club 55, to one of the divinely decadent but terrifyingly expensive nightclubs in town. £290, www.matchesfashion.com 8. SEASIDE SMART COOKIES The Mermaid Cookie Set, shown here, comes from a small artisan bakery in the New Forest, Forest Cake Crafts. Lovingly handcrafted and decorated by Zuzanna in her home kitchen, these are works of edible art. She can also create custom orders. Using only free range eggs and organic honey, the pastel-coloured shortbread biscuits here follow a seaside theme. Individually decorated with royal icing, sugar sparkles, fondant shells and edible glitter, each of the 10 biscuits in the set is carefully hand-wrapped to preserve freshness. With a glass of bubbly, they make the perfect sweet snack while lazily lounging sur la place. £35, www.yumbles.com

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9. HELLO, SAILOR Le Male Eau Fraîche Limited Edition 2018 by Jean Paul Gaultier is as fresh and off-the-wall as its funky packaging. Gaultier collaborated with the unashamedly cool, über-stylish street artist and club mogul André Saraiva on the design of this year’s summer edition, which screams of the OTT kitschy excesses of St Tropez. The unique bouquet of the fragrance is the work of the undisputed Sovereign of Scent, Nathalie Gracia-Cetto. Name a top-selling fragrance and she’s the nose behind it. This summer’s Limited Edition smells as fresh as a sea breeze and is as cool as the gentle breath of summer. Eccentric though it may sound, the scent is like a whiff of sexy fabric softener mixed with a hint of mint, neroli, sandalwood and a big hit of vanilla. A little dab will do you, guys, before hitting the Côte d’Azur’s trendiest, most prestigious nightclub Les Caves du Roy – still going strong after 40 years. £60, 125ml, www.debenhams.com

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10. RIVIERA HEAD-TURNER The late, great Oscar de la Renta once emphatically stated: “Fashion should only enhance the beauty of the wearer, not overshadow it”. This impeccably constructed one-shoulder/openback printed swimsuit in stretchy, sculpting material by Oscar de la Renta is steadfastly true to the great designer’s philosophy. The colourful all-over collage print is hugely reminiscent of the work of French artist Jean Cocteau. Like many of the leading French avant-garde artists of the early 20th century, Cocteau spent his summers on the French Riviera at Villa Santo Sospir in Saint-Jean-Cap-Ferrat. He decorated every inch of the villa with his work, and you can still see it today. So, when you’re on the Riviera, why not take a break from the beach and soak up some culture along with the sun? £820, www.farfetch.com

11. STOMPING IN STYLE Canadian design duo twins Dean and Dan Caten – the brains behind cult luxury label Dsquared2 – always bring a humongous hit of glitz and glitter to the Milan fashion scene with their unceasingly OTT catwalk shows. The outrageously high, platform wedgie cha-cha heels, pictured here, are from their SS18 collection, and are the perfect attention-grabbing shoes to wear at the nightly fashion show that takes place on the quayside in St Tropez. Crafted in Spain from butter-soft calf leather and suede, and with woven jute for the platform sole, the slingback, ankle-strapped, open-toed killer cruisers sport a tropical-print-branded insole and are gaily festooned with a gaggle of hanging tassels. So, put on them cha-cha heels, honey, and get stomping! £540, www.farfetch.com

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12. A BRAND NEW DAWN Rolls-Royce has firmly pinned its colours to the mast with its brand new Dawn, writes Danny Cobbs. The message is clear and threefold: the Dawn is the most social of super-luxury drophead motor cars; a striking, seductive encounter like no other Rolls-Royce to date; and, quite simply, the sexiest Rolls ever built. Or in other words, if you’ve got at least a quarter-of-a-million to spend on a behemoth four-seater convertible with unparalleled levels of comfort and workmanship, then, ta-dah, here it is! But the Dawn is more than just a fourwheeled, open-top, homage to conspicuous consumerism; it’s also a very composed driving machine. And, given that it weighs more than two-and-a-half tonnes and is nearly twice as long as two small city cars, that’s no small feat. Quick corners are easily absorbed, ensuring it feels fast but never rapid. Under the vast bonnet lies a whopping

6.6-litre V12 563hp engine, electronically muzzled to 155mph, which makes light work of propelling the Dawn from a standing start to 62mph in 4.9 seconds. Rear seat passenger space hasn’t been compromised either. The coach-built doors, which open back to front, not only add to the Dawn’s sense of grandeur and occasion, but they also guarantee that the rear access is inviting and fuss-free. The new Rolls-Royce Dawn is exceptionally crafted, beautiful to drive and stunning to look at. The engine’s a real gem and it’s even impressively practical, too. Yet the fact remains – very few people will ever be in the position to justify spending this amount of money on such a car. However, for those fortunate few, the Dawn really is in a world of its own. From £265,000, www.rolls-roycemotorcars.com

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13. ANGLO-FRENCH ALLIANCE Founded in 1979, Hackett London prides itself on being the home of the ‘essential British kit’. It’s always stuck to its guns with its strong point of view on men’s fashion. The classic Hackett look is based on authentic British style but with its own distinctive je ne sais quoi to keep things fresh. Despite being True Brit in concept and style, the SS18 collection epitomises the masculine, smart-casual look favoured by all fashion-conscious Frenchmen. So, the clothing couldn’t be more perfect for the Côte d’Azur. The muted, sophisticated, sun-drenched colours of the Riviera enhance the more polished laid-back summer style of the clothes. Pictured here, the cool, relaxed, horizontal marine bluestriped seersucker blazer is cleverly put together with a classic wide matelot-striped cotton shirt and tailored stretch cotton Bermuda shorts, accessorised with the chic but discreet jersey and leather parachute belt. The perfect high-summer attire for sipping bubbly as the sun sets in front of the Sénéquier café on the St Tropez quayside. As they say in France: “A ta santé, mate”! Blazer, £350; shirt, £115; shorts, £80; belt, £75, www.hackett.com

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14. SHELLING OUT This season, Prada and Versace, among others, issued a collective edict that seashells are the new sequins! Fashionistas and international style-setters rapidly picked up on the trend. LA-based fashion and accessories designer Rebecca de Ravenel has literally gone overboard this season, looking to the ocean and sun-soaked locales for inspiration and exploring marine motifs with a beach-ready vibe. The She Sells Seashells Basket Bag, pictured, is a beachwear winner. It’s made from natural coloured straw with a multi-colour, multilayered explosion of gorgeous seashells on the bag’s front. To go along with the deep-sea theme, the Delphine Shell and Fish Drop Clip-On Earrings feature an over-sized shell motif dangling with painstakingly hand carved fish charms. And, if you dare, why not throw caution to the wind with your high-summer ensemble and don the statement necklace to end all statement necklaces. The Caspia Wood Fish Charm Necklace is made from gold-tone brass, from which hang intricately carved bayong wood fish charms with white stone embellishments. Perfect when worn with a décolleté top that allows the fish charms to float on glowing summer skin! Bag, £240; necklace, £535; earrings, £310, www.matchesfashion.com

15. SLIP-ON SUMMER The classic, lightweight espadrille-style Tour Du Monde slip-on shoe, pictured here, is by the Paris-based shoe company appropriately named Rivieras Leisure Shoes. This footwear is the ideal choice for sporting on the sandy white beach at Club 55 in St Tropez, but it will also carry you right through to cocktails by the quayside after slipping into your crisp white linen suit. Made in Spain – as many good shoes are these days – the Tour Du Monde slip-on features a springy rubber sole for assured comfort and is constructed from durable cotton canvas and mesh. Lined with absorbent terrycloth with a sheepskin inner sole, you can’t go wrong. £50, www.stuartslondon.com

16. LUXE LENSES Leave it to Dior Homme to come up with a cutting edge, Côte d’Azur-cool reinterpretation of the classic aviator sunspecs. These slick, sleek, chic super-macho shades by Dior Eyewear will definitely set you apart from the poolside parvenus and the Primark plebs quaffing lager at the bar. Dior is the ultimate luxe label. Synonymous with the French national identity, the brand is known for its timeless elegance and sharp tailoring. Through careful stylistic juggling, both the 40-something ex-raver generation and the cyber-charged streetwise Generation Z are represented on the Dior Homme catwalk. Middle-aged matinée idol dudes Justin Theroux, Orlando Bloom and Jared Leto, along with popster poseurs such as Justin Bieber, Joe Jonas and Tyga all wear Dior Homme. This is a brand that has something to suit every guy and every guy’s taste. Just like the shades on show. £450, www.farfetch.com

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THE AGENDA

17. SAIL AWAY Whether it’s the French Riviera or Skegness, this ensemble, which has a definite nouveau nautical classic feel, makes the perfect holiday attire. Created by the wildly popular Winser London, the classic Breton textured cotton jacket offers a relaxed boxy shape that perfectly hits waist level and sports oversized statement mock-horn buttons. It works brilliantly worn with either a simple shift dress, or, as shown here, with modern slim-leg jeans in Italian two-way stretch-cotton blend fabric. Both jacket and jeans really are wardrobe winners. Then comes the beautifully simple linen tunic top. With a scooped neckline and a curved hem, it comes in a vast array of colours. This is one top that should be an indispensable basic in every lady’s holiday wardrobe. Here’s to summer, and here’s to Winser London. Jacket, £99; jeans, £129; tunic top, £89, www.winserlondon.com

18. BEACH BOYS British swimwear and beachwear label Boardies always seems to come up trumps every season, with just the right colours and styles, as well as the latest techno fabrics for fast-drying and holiday durability. The Fresh Prince Mid-Length Swim Shorts, pictured here, are the very embodiment of the glamorous, sun-drenched style of the French Riviera. The unmistakable retro artist-inspired bold abstract print is colourfully enhanced by a delicious ice-cream colour palette that’s sure to light up any beach or poolside. Made of super-soft, quick-dry fabric, these shorts feature two side-pockets and come in a special Boardies drawstring bag. The perfect choice for wearing sur la place, or later for cocktails by the hotel pool. £50, www.stuartslondon.com

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19. FRENCH DRESSING The mega-talented London-based designer Alice Temperley launched her eponymous label in 2000. Since then, she’s taken the international world of fashion by storm and has been described as ‘the English Ralph Lauren’. She also happens to be the Duchess of Cambridge’s favourite designer. Describing her Summer 2018 collection, the designer sums it up by saying: “It encapsulates the sartorial mood of an escape to the French Riviera, suggesting days spent poolside, followed by martinis at the golden hour.” See, The Agenda isn’t the only one with Côte d’Azur fever! Pictured below, the sleeveless azure-striped Trelliage Dress was the key piece on the SS18 catwalk. Featuring a halter neckline and bold zigzag embroidery, the frock is a playful tribute to the 1950s sundresses photographed on the Riviera by Louise Dahl-Wolfe, staff photographer for fashion bible Harper’s Bazaar from 1936 to 1958. This standout summer dress really does channel the jet set glamour of the 1950s. A real winner! £795, www.temperleylondon.com

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Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

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Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us. Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Wendy Warder – Senior Trust Manager wwarder@baccata.co.je Lisette Le Creurer – Senior Trust Manager llecreurer@baccata.co.je Justin Clapham – Client Director jclapham@baccata.co.je Áine O’Reilly – Client Director aoreilly@baccata.co.je Tim Cartwright – Consultant tcartwright@baccata.co.je www.baccata.co.je Tel: 00 44 1534 870670

Be Secure is lead by a highly experienced finance professional, who has worked in senior roles in private equity owned businesses, in both commercial and financial services business sectors. As a member of the International Association of Privacy Professionals (“iapp”) and as a Certified Information Privacy Manager (CIPM) and GDPR Practitioner, Be Secure’s founder and director can help you, and your colleagues, manage this area in a professional and practical way for your organisation and clients. For further information please contact: Brian Siney, Founder and Director, CIPM, FCA brian@besecure-consultants.com +44 7797 738743 or www.besecure-consultants.com

Carey Olsen is a leading offshore law firm. We advise on Bermuda, British Virgin Islands, Cayman Islands, Guernsey and Jersey law across a global network of nine international offices. We are a full service law firm working across banking and finance, corporate and M&A, investment funds and private equity, trusts and private wealth, dispute resolution, insolvency and property law. Our clients include global financial institutions, investment funds, private equity houses, multinational corporations, public organisations, sovereign wealth funds, high net worth individuals, family offices, directors, trustees and private clients. We work alongside all of the major onshore law firms, accountancy firms and insolvency practitioners on corporate transactions and matters involving our jurisdictions. Our advice is delivered by an approachable and experienced team of globally-minded lawyers who work in partnership with our clients to help them achieve their objectives. We have the expertise and resources to handle the most complex international transactions combined with a personal approach to business. Contact: guernsey@careyolsen.com T +44 (0)1481 727272 jerseyco@careyolsen.com T +44 (0)1534 888900 www.careyolsen.com

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