Jersey
Bank Accounts
Andrew Coyne reports on why Jersey is confident it can overcome
threats to its future
It is sometimes said that when people become rich and money
is no longer a concern they start worrying about their health.
Whether the human condition needs something to worry about or
not is a matter of conjecture. What is more certain is that
Jersey as a finance centre has not had a period over the last
few years where there hasn’t been a nagging uncertainty
in the background.
First it was the Edwards Report - the UK government-commissioned
audit into the regulations and practices of the UK sterling
area offshore centres which came up with a number of recommendations.
Then came an attack from the OECD - the Organisation for Economic
Co-operation and Development - on what it saw as harmful tax
competition because of the fiscal advantages offered by centres
such as Jersey.
And then came news that a planned withholding tax on saving
income within the European Union was threatening to engulf the
Channel Islands and the Isle of Man, as well - or at least if
EU centres such as Luxembourg had their way.
Jersey Bank Accounts & The Edwards Report
With hindsight, the Edwards Report - attacked as the UK government
riding roughshod over the independence of the sterling centre
offshore islands before the review was carried out - is now being
seen as something which was to the island’s benefit. Edwards,
a former UK Treasury official, was largely complimentary about
Jersey’s financial regulations and practices and, to a certain
extent, the island has been able to use this as a marketing tool.
However, Edwards did have some criticisms - he suggested there
was a need for an offshore ombudsman, that a deposit compensation
scheme such as the one that exists in the Isle of Man should
be considered, and he said there was a general need to tighten
up the regulation of trusts and companies. ©
To its credit, Jersey has acted on many of Edwards’ recommendations.
A consultation paper has already been sent out to the industry
asking for comments about the possibility of a compensation
scheme for depositors and a new trust regime has become law
(see the information panel on page 46).
Jersey Bank Accounts - Edwards Suggestions
Another of Edwards’ suggestions was that there should be
greater co-operation between industry and government and the formation
of the Jersey Finance Industry Association (JFIA) should help
to facilitate such co-operation. Made up of bankers, lawyers and
accountants, it is intended to be the senior body representing
the island’s finance industry and it will have a close relationship
with the Financial Services Commission, in particular, and the
Jersey government in general.
What is irritating to both the island’s professionals
and its authorities, however, is the fact it is receiving mixed
signals from world bodies about its status as a financial centre.
Praise from Edwards and from a new Financial Stability Forum
Report (see the information panel below) have to be balanced
against the ongoing campaign by the OECD against offshore centres.
At the time of writing, a report in The Times newspaper suggested
that Jersey was set to defy the OECD over regulatory and disclosure
standards and may as a result be ‘outed’ by the
OECD as an ‘unco-operative’ tax haven.
The report goes on to say that Jersey and the Isle of Man, which
has taken a similar stance, could face punitive sanctions if
they continue to resist worldwide moves to clamp down on tax
avoidance. Such measures could include OECD countries revoking
double tax treaties with the centres.
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