I am very pleased to be here with you all today at your fifth annual seminar and I am particularly glad to see so many members of the industry here today.
In my fifteen years as a politician I have been privileged to address this association in a number of different capacities. Today I do so in my new role, since the election last October, of Assistant Chief Minister with responsibility for Financial Services, Digital, Competition and Innovation.
Opportunities
While this sounds like a broad range of responsibilities, in reality this role brings together the key areas where we see significant growth opportunities for Jersey. I think there will be no doubt for those in the audience today that the Jersey Trusts Law was a key gamechanger in Jersey's economic performance.
It is my view that the trusts industry has, in the past, perhaps not received the recognition it deserves in relation to Jersey's economic performance. If you only look at the financial return from the trusts industry this does not provide the whole picture.
Having sat in the Treasury for twelve of the last fifteen years I understand the direct financial return made by banks, funds and other financial service sectors that derive their capital and income from assets you source. The true value of the trust sector can be understated.
While it's always difficult to single out one sector I certainly recognise the trust sector as the engine of growth and income.
That is why your industry matters so much today and why the performance of the trusts industry matters so much to the future of this island.
Strategic priorities
I would like to concentrate on two themes: firstly, the Council of Ministers' strategic priorities for Jersey, and how these support the expansion of the Trust and Company Service sector.
Secondly, I would like to say a few words about how I envisage my new role and the activities I will be undertaking on behalf of the Government.
So our priorities:
- secure jobs and growth
- reform health
- a new and renewed focus on education and skills
- a specific and important focus on St Helier
At the heart of the debate on tax and spending is the need for government to prepare for a world with dramatically changing demographics. An ageing society is a good thing, as it means people are living longer, but it does require different health care services. That is going to require more money.
We are seeing a UK election focused on a winter NHS crisis. Here in Jersey, we want a debate about health care in 2025, not 2015. We will face a potential deficit if we don't act now to cut spending where we can and grow the economy.
We have a hundred per cent of GDP in assets, while other jurisdictions have a hundred per cent of GDP in debt. We dealt with pension reforms and increased social security contributions decades ago. We want our debate to be about the future.
Resilience
Jersey's financial services industry has demonstrated an innovative and resilient approach to many years of change in the global economy. Our ability to maintain a successful international finance centre has been facilitated by our talent for adapting to market conditions and business needs. The problem with success is that it sometimes leads to complacency.
In recent years we have done well to avoid much of the complacency that comes from assuming existing products and markets will never change. We need to keep up this nimble approach to global developments.
Our other three priorities are all about how Jersey needs to adapt to this fast-changing world.
Economic growth
I want to speak to you today about economic growth, for which the financial services industry will be central.
Creating economic growth is critical to the future success of the island. It will achieve greater levels of employment, provide more tax revenue and reduce reliance on Government funds for social services.
Continued economic growth leads to a higher standard of living and mitigates against the need for rises in taxation.
To achieve economic growth we must scan the horizon for opportunities and seize those opportunities when they present themselves. Relying on the previous successes that we created is not enough. Like all investment managers say, past performance is not an indication of future gains. We must stimulate forward looking growth through sensible innovation, investment and enterprise.
Business tendency survey
It is important that we start with a clear picture of where the financial services industry is currently positioned - particularly the trusts industry.
Last week the Statistics Unit released the most recent Business Tendency Survey and it makes interesting reading. While it is unfortunate that the JEP carried the headline last Thursday, 'Finance job losses are expected', the JEP was not incorrect. Finance job losses can be expected, but these will predominantly affect the banking sector, and have been anticipated for some time.
What the report failed to mention was that there are a number of positive indicators in other sectors in the finance industry. One of those is in the trusts sector.
Throughout the finance industry business optimism remains high and profit expectations are positive for 2015. Anticipated employment in Trusts and Company Administration, both in the short term and longer term, remains positive with the same level of increased levels of employment predicted for 2015.
Something that will please the Treasury Minister is that both short and longer term profit increases are anticipated in Trust and Company Administration. I think everyone will agree that we have come a long way since the start of the financial crisis in 2008 and the results of the tendency survey demonstrate just that. This has not happened by accident. A lot has been achieved, and much of that is thanks to your hard work.
We have reached the top of the current mountain, but, as always in this world, there are greater summits to conquer. What I want to be clear on today is that we are well positioned for the next climb, and that is why I consider it to be an extremely exciting time for the industry.
Through the strategic priorities of the Council of Ministers and in my new role I am one hundred per cent committed to being part of the support team for the next climb, which we are embarking on together.
Planning ahead
We have had a period of careful strategic planning. McKinsey's independent jurisdictional review identified clear opportunities for quality, well regulated and respected international finance centres. McKinsey identified emerging global trends and issues in the sector:
- a focus on tax and transparency
- consolidation of existing banking entities
- a continued push towards more supranational and domestic financial regulation
In order to maintain our position as an international financial centre of substance, and substance is the key word, Jersey must meet the demand for international finance centres in a modern global economy and address the emerging trends and issues within the sector.
McKinsey provided us with several recommendations to follow:
- sustain Jersey's core business and ensure long term prosperity of Jersey's financial services
- enhance the business enablers that allow us to stand out as an IFC
- capture adjacent growth with our existing products, services and market
- explore more ambitious opportunities in less familiar business territories by building new capabilities
The Financial Services Policy Framework, released last year, builds on the McKinsey recommendations. And we, as a government, are absolutely committed to delivering the policy framework to provide the economic growth that Jersey needs.
Strategic priorities
A number of the Council of Ministers' strategic priorities released last week are particularly relevant to the trusts industry.
Enterprise and investment
Jersey is open to, and supports, enterprise and inward investment. We, in government, are determined we do everything we can to foster an environment which supports the growth and expansion of existing businesses and the starting up of new ones.
We are determined to position Jersey as the most helpful, welcoming, responsive business environment which encourages enterprise, innovation and competition. One key area for the trusts industry is for us to enhance Jersey's reputation with new target audiences.
That includes overseas markets in which we look to do business in the private wealth management arena. This is an area that the Chief Minister, the External Relations Minister and I are committed to working on together in order to deliver economic growth for Jersey.
Skilled workforce
The government recognises the need for a skilled workforce aligned to the needs of productivity-led economic growth. Many will be aware there has recently been discussion on the skills required for the finance industry in the island. The Council of Ministers are committed to reviewing and upgrading the existing skills strategy, and this will be done with the finance industry at the forefront of minds.
The Council of Ministers are also committed to securing migration that is targeted and delivers the greatest gain, and they will support the requirements of the finance industry in this area.
High quality regulation
A fourth key priority is to deliver a high-quality regulatory environment. We are experiencing a 'flight to quality' around the world and Jersey's position as a leader in establishing high quality regulation through the JFSC puts the island in a great position to take advantage of future opportunities.
I was particularly glad therefore to see that John Everett, the Director of Funds and Fiduciary at the JFSC, spoke to the conference earlier this afternoon. The relationship that now exists between the Government and the Regulator is closer than it has ever been and we are working in partnership.
The Council of Ministers are committed to providing the right regulatory environment for Jersey, in partnership with the JFSC, to take advantage of the opportunities the 'flight to quality' offers.
I consider that the quality of regulation in Jersey is an important driver, allowing us to access the opportunities in many of the new markets where we are exploring business opportunities.
Financial Services, digital, competition and innovation
Moving away from the strategic priorities, I want to talk about some of the main responsibilities that are going to be involved in my new role as Assistant Chief Minister with responsibility for Financial Services, Digital, Competition and Innovation.
My role, in conjunction with other Ministers, is to stimulate economic growth in line with the Council of Ministers strategic priorities. I joked earlier this week that I consider my new role is one of the most exciting in politics.
One area that is particularly exciting is the emergence of the "Fintech" sector, combining Finance and Technology. I am convinced that Jersey's economic future will involve a significant role for Fintech.
Tomorrow I am taking Senator Bailhache to Level 39, the UK Government's promotional body for Fintech and I am tremendously excited about the opportunities here. I would encourage all in the trusts business to consider Fintech opportunities and I am delighted to see that the Jobstream group, that provide integrated trust management software, are sponsoring today's event .
Innovation in products and services
Jersey has a history of being innovative in its global financial services and it is essential that this trend should continue into the future. As many of you will know, the Trusts Law last year celebrated its thirtieth birthday and that piece of legislation has been the core offering in this area.
We have not stood still though. In 2009 we introduced the Foundations Law and there are now more than 250 Foundations registered in Jersey. We can see examples of innovation in the diversification of our product in Philanthropic Wealth Management. We are ideally positioned to expand our traditional wealth offering in this area and I was delighted to support the Chief Minister in taking the Charities Law through the States Assembly last July.
I am committed to working with the Chief Minister during the introduction of the Charities Law so that it supports both local charities and the advancement of philanthropic wealth management.
We also continue to innovate with 20 potential amendments to the Trusts Law under active consideration by Government. These have been channelled through a working group organised by Jersey Finance, which a number of you are involved with.
These amendments are absolutely essential to keeping up with the global pace of change in your industry and your input is critical to that.
Working together
The government, industry and regulator must align priorities and coordinate developments for the benefit of all; without, of course, impacting on the independence of the regulator. Over the past three years we have made tremendous progress in working together and this is demonstrated by the work already been done delivering the McKinsey initiatives in the Financial Services Policy Framework.
My intention in my new role is to further enhance this partnership. Only by working together on the challenges that the island faces will we achieve the success that we are striving for.
Innovation in marketplaces
McKinsey was that to ensure long term prosperity Jersey must explore more ambitious opportunities in less familiar business territories. Over the last three years we have been working hard to build political contacts in both existing and new jurisdictions where we would like to do business.
There is now a multi-agency group which has established key country priorities. This has been achieved through the much closer working relationship with Jersey Finance and the JFSC.
There are political visits scheduled, supporting the work of Jersey Finance, to a number of business territories where opportunities exist. Engagement planned in 2015 includes visits to the GCC, China and Hong Kong and next week I will be in South Africa promoting the interests of our financial services community with our Director of Financial Services. These territories provide significant opportunities in the private wealth management sector, as many of you will have identified.
A lot of the work in this area has been supported by the Jersey Finance Business Development Team, who now have a permanent physical presence in London, Hong Kong, Dubai, Abu Dhabi, Shanghai, Mumbai and Delhi. They also access a number of other marketplaces on regular conferences and business development delegations.
I am aware a number of firms here today have been represented on these visits and I would encourage you to continue this. 2015 will see the largest programme of engagement into new business territories that has been carried out.
It is, of course, important not to forget more traditional marketplaces that we need to maintain representation in. Jersey's most significant market is the United Kingdom; more specifically the City of London. A lot of our overseas business comes to Jersey via the City.
When I took on my new role I planned to work two days a week in London to develop this key relationship, with the help of the Government of Jersey London Office.
Europe is also an important market, where we have sought to protect access through contact with the European Commission, Parliament and Member States. Our Channel Island Brussels Office has done a sterling job in Brussels, supplemented by direct contacts with Ambassadors and officials in London and visits to other capitals in Europe.
It will also not be forgotten by many that we worked hard for the removal of Jersey from a French blacklist of jurisdictions in 2013. This was achieved by addressing a small number of outstanding requests for tax information, and by modifying the regulations.
However, as is often the case, ministerial dialogue behind the scenes is important in achieving these results. The Island's presence in France has been enhanced by the establishment in June 2014 of a joint Channel Islands office in Caen.
Horizon
I am optimistic about the future for the finance industry in Jersey. Thanks to years of hard work, Jersey has established many world class financial services institutions, each employing highly skilled and experienced individuals.
We will work hard to maintain this excellence and, as highlighted in our strategic priorities, change and innovate to ensure continued success in the future.
When we study the horizon we can see clearly what Jersey needs:
- a clear economic strategy to which all are fully committed
- a commitment to business growth
- compliance with international standards to protect the Island's reputation
- a partnership between government, the regulator and the industry - with shared objectives
- a quality product
- a willingness to welcome enough skilled staff to maintain a competitive industry
- an ability to make prompt decisions, whether to enact legislation or provide essential infrastructure
I am committed to ensuring we maintain our well-earned reputation as an IFC of genuine substance. Increasingly business success will come from the quality of the services provided, and the speed of response to market needs, based on a foundation of common standards.
Jersey is well placed on all counts, and has a great future ahead of it.
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