BL Magazine Issue 63 July/August 2019 by BL Magazine

GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS

BUSINESSLIFE

ISSUE 63 JULY/AUGUST 2019

Employee benefits How to be an expat Globalisation Digital wills People's QE Compliance Cybercrime Regtech

BUSINESSLIFE

DUTY OF CARE ISSUE 63 JULY/AUGUST 2019

It's time to face up to stark statistics about employees' mental health

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Welcome

This is an issue we can’t afford to ignore SUMMER’S HERE, the days are warm and long, and much-needed holidays are on the horizon. It should be enough to lift everyone’s spirits but the sad reality is that for many workplace colleagues who suffer from conditions such as stress, anxiety and depression, summer won’t bring any relief. In our cover feature for this issue (page 36), we explore this growing challenge for businesses – poor mental health among employees. The financial services sector does not fare well here. A recent member survey by the Chartered Institute for Securities & Investment revealed ‘off-the-scale workloads and out-of-touch senior management’ as key causes of stress and mental ill health. Another survey by HR consultancy AdviserPlus reckons a third of employee absences in the sector are due to mental ill health. This should ring alarm bells for the Channel Islands, dominated, as their economies are, by financial services businesses. The good news is that some employers in Jersey and Guernsey are working to change this issue from a taboo to one that’s openly discussed and supported in the workplace. We’ve spoken to Utmost Worldwide, Deloitte and Fairway Group about the solutions they are putting in place. And in our main interview with Nigel Le Quesne, CEO of JTC (page 20), he tells us about JTC Wellbeing, a new initiative the business has introduced to help employees take a more holistic approach to their physical and mental health. Unless more companies such as these come forward to acknowledge the issue and share potential solutions, this is a problem that will continue to dog the financial services sector, affecting recruitment and retention, reputation and, ultimately, business results.

DIGITAL DEFENCES Another growing threat to reputation and results is cybercrime. If phishing wasn’t enough to keep us on our toes, did you know that companies now have to contend with smishing, vishing, ratware, scareware, pretexting, tailgating and whaling? Neither did I, but cyberspace is getting scarier by the day. Worryingly, a 2017 survey by the Jersey Financial Services Commission found 32% of financial services firms on the island had

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no cyber incident response plan in place. On page 42, we explore the steps businesses should follow if their digital defences are breached. Having robust incident response plans – and, better still, incident prevention plans – in place is going to be more important than ever as we continue to move towards digitisation. On page 32, we look at one burgeoning area of that particular trend: regulation technology, better known as ‘regtech’. According to Juniper Research, corporate investment in these technology solutions, which are designed to help businesses understand their regulatory obligations and remain compliant, are set to grow from $18bn in 2018 to £115bn by 2023. If those figures make compliance professionals concerned about regtech solutions taking over their jobs, they shouldn’t. Our feature on page 62 reveals that compliance functions are facing a talent shortage as the compliance officer role grows in importance.

MACRO ISSUES Elsewhere in this issue, we explore some interesting macro issues. According to the OECD, global foreign direct investment fell by 27% in 2018 – the third consecutive year of decline. Taken together with growing evidence of populism and protectionism, we ask whether globalisation is in retreat and what this means for international financial centres (page 50). And on page 65, we look into an idea that’s gaining traction in some economic quarters: quantitative easing for the people, or ‘People’s QE’. UK Labour Party leader Jeremy Corbyn is said to be a fan. As events in Westminster continue to unfold in their increasingly unpredictable way, we thought it wise to take a closer look at the opposition’s thinking. We have plenty more interesting reads in this issue, including how to be an expat (page 28) and drawing up a ‘digital will’ (page 58). Enjoy the read. Enjoy the rest of the summer. And we look forward to seeing you back here in the autumn. n

Poor mental health will continue to dog the financial services sector, affecting recruitment, reputation and, ultimately, business results

Eila Madden, Editor-in-Chief, Businesslife

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BUSINESS LIFE

The funds Edition 2019

Get involved in 2019 FOR EDITORIAL QUERIES, CONTACT eila.madden@blglobal.co.uk FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK

Contents

INSIDE

58 10 Regulation watch

A global regulatory outlook from Duff & Phelps’ Malin Nilsson

BUSINESSLIFE

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

CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk EDITOR-IN-CHIEF Eila Madden 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

50 6 News

36 mental health

58 digital wills

The latest Channel Islands business news

Employers are recognising their moral responsibility to help staff maintain their mental wellbeing

How to pass on your burgeoning wealth of ‘digital assets’ when you die

42 cybercrime

Why the compliance officer role has become the new route to the top table

8 Appointments Recent people moves in Guernsey and Jersey

20 Interview Nigel Le Quesne, JTC’s CEO, tells us why share ownership underpins the group’s success

What to do when cyberattackers breach your digital defences

50 globalisation

28 living overseas

Are international finance centres under threat from a decline in flows of global trade and investment capital?

Four steps to making expat life a success

54 employee benefits

32 regtech Regulation technology is shaping up to be a competitive advantage

Interest in the Channel Islands’ employee savings schemes is on the rise, thanks to improved regulation

12 Comment Engaging with China, collaborating on fintech, and avoiding the pitfalls of fund closures

62 compliance

The knowledge

65 people’s QE What is it, and how can it be a solution to the low-growth dilemma?

US-China trade, how to become a thought leader, 5G and finance, plus much more

82 20 questions C5 Alliance’s Scott Workman, on catching lobsters and diving off the Great Barrier Reef

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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Emma De Vita is an award-winning freelance journalist who writes about work, business and everything in between. In this issue, she explores the growing problem of poor mental health at work.

JESSICA FURSETH

Ever wondered what happens to all your digital photos, videos and music when you die? Technology writer Jessica Furseth discovers that they won’t go to your loved ones if you fail to make a ‘digital will’.

CHRISTOPHER MENON

Some economists believe quantitative easing has failed to deliver results and are advocating a ‘People’s QE’. Business writer Christopher Menon finds out what it’s all about.

LEN WILLIAMS

Len Williams is a Londonbased freelance writer who holds a master’s degree in international migration. In his first piece for Businesslife, he explores the challenges and rewards of living and working as an expat.

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UK APPROVES JERSEY BENEFICIAL OWNERSHIP DATA SHARING Jersey’s ability to share company beneficial ownership information with the UK’s law enforcement agencies is effective, a review presented to the UK Parliament has found. The periodic statutory assessment of the Exchange of Notes commits the Crown Dependencies and six British Overseas Territories to providing the UK with information about beneficial owners of companies incorporated within those jurisdictions. It highlighted Jersey as an example of best practice. Processes are in place, it said, that prevent any new entity being created if it is not entered onto the beneficial ownership register, and which continually verify and assure the accuracy of information on the register.

SANNE OPENS OFFICE IN MUMBAI Jersey-headquartered alternative asset and corporate services provider Sanne has opened an office in Mumbai, India. It means the group, which already has offices in 18 international finance centres, now has a local presence in one of the world’s fastest growing alternative markets. Khushboo Chopra (pictured, above) has been named as the group’s Head of Business Development – India. She has more than 10 years of experience in the local banking sector, most recently as Senior Manager in SBI-SG Global Securities Services, a joint venture between the State Bank of India (SBI) and Société Générale Securities Services (SGSS), offering custody and related services in India. Sanne’s Mumbai office will initially focus on servicing existing clients in the region while expanding the visibility of the brand and Sanne’s global offering there.

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Image: VisitGuernsey

in the NEWS HSBC EXPAT LEAGUE TABLE HIGHLIGHTS CHANNEL ISLAND BENEFITS HSBC Expat’s latest Best places to live and work league table has highlighted some of the benefits of moving to Guernsey and Jersey, both of which have been included in the ranking for the first time this year. According to the research, 83% of people moving to Jersey to live and work say they feel safer and more secure on the island. Three-quarters of those people said they had enjoyed a better quality of life since moving there, while 66% said the environment was better than where they had lived previously. Jersey also rated well for families – 59% of people said it was easier for their children to make friends and 55% believed their children had become more adaptable to change from the experience. Meanwhile, people moving to Guernsey earn more than the average expat globally and often stay longer than planned, the research said. Guernsey-based expats revealed that their average income was $78,452 – higher than the average of all respondents from 163 global locations ($75,966). UNLOCKING OPPORTUNITIES IN THE COMMONWEALTH Jersey’s Minister for External Relations, Senator Ian Gorst, has agreed a partnership programme with the Commonwealth Enterprise and Investment Council (CWEIC). Senator Gorst attended the signing in London with Assistant Minister Connétable Richard Buchanan, and signed the programme with the Chair of the Council, Lord Marland of Odstock. It is hoped that the partnership with CWEIC will unlock opportunities for Jersey to increase access to decision-makers in priority Commonwealth markets through CWEIC’s extensive cross-border networks and in-country expertise.

GUERNSEY GAINS INSURANCE REGULATION APPROVAL The International Association of Insurance Supervisors (IAIS) has singled out Guernsey as having ‘a high level of observance of current international standards’. The stamp of approval comes in the IAIS’s first report assessing a member’s implementation of Insurance Core Principles (ICPs) – a globally accepted framework of principles, standards and guidance for the regulation and supervision of the insurance sector. The Guernsey Financial Services Commission is a member of the IAIS, which promotes cooperation among insurance supervisors worldwide.

PRIVATE EQUITY ATTITUDES TO GREEN FINANCE REVEALED Guernsey Finance has published findings suggesting that the political backdrop is encouraging private equity managers to consider more investment in green and sustainable finance – but they also want to see more transparency in those funds. The report – Private equity and green finance: Encouraging demand and transparency in climate finance – reveals rising interest in green investment from managers, but warns that they have underestimated the funding requirements and commercial opportunity for limiting global warming. Three-quarters of those surveyed have increased exposure in green and sustainable finance and everyone plans to do so in the near future. External drivers, such as investor demands and competitive forces – including the ‘Attenborough effect’, which credits veteran broadcaster David Attenborough with raising people’s awareness about the impact of their consumption – are the main reason for doing so. n

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News

Done Deals MERGERS AND ACQUISITIONS Financial services specialist Catalyst Development and global consultancy Sionic Advisors, which has offices in Jersey, have merged under the Sionic brand. Craig Sher, who has been with Sionic since 2014, has been named Chief Executive Officer of the newly combined business. Andrew Middleton, Catalyst’s CEO since August 2015, becomes an Executive Director of the Sionic board. He said the firm would be making senior hires and opening offices across Europe, Asia and the Americas. Sionic is backed by mid-sized private equity firm Livingbridge. Butterfield Bank has completed the acquisition of ABN Amro (Channel Islands), following all regulatory approvals. ABN Amro CI has been renamed Butterfield Bank (Channel Islands), or BBCI. Over the next 12 months, BBCI will be integrated with Butterfield Bank (Guernsey). BBCI will operate within the Butterfield group as integration plans for clients and staff within a combined Butterfield Guernsey bank are rolled out. Financial services group SMP secured all necessary regulatory approvals in June for its management buyout, gaining approval from seven financial services regulators. The deal has been backed by Palatine Private Equity, with extra debt funding from Apera Asset Management. In July, SMP also announced its acquisition of Jersey-based trust and corporate services provider Helm Trust Company, subject to approvals. The deal has been undertaken again with the support of Palatine Private Equity and Apera Asset Management. Zedra has acquired Interben Trustees in Guernsey to enhance its global pension and employee benefits portfolio and give it an entry into the Norwegian, Finnish and Swedish institutional markets. The deal is subject to regulatory approval. Interben’s staff will join the Zedra Guernsey office. n

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Appleby’s Jersey team, led by Partner Andrew Weaver and assisted by Associate Zim Ceko, has advised and acted as Jersey counsel to Russian gold-mining company Petropavlovsk and its subsidiary, Petropavlovsk 2010, on the issue of new $125m guaranteed convertible bonds. The team also advised on consent solicitations to amend the terms and conditions of existing $100m guaranteed convertible bonds issued by Petropavlovsk in 2010 and the repurchase of existing convertible bonds. Appleby assisted with obtaining regulatory approvals from the Jersey Financial Services Commission relating to amendments to the terms and conditions of the existing bonds and the issue of the new bonds. Bedell Cristin has acted as counsel to Monument Re on its acquisition of Nordben Life and Pension Insurance from BenCo Insurance Holding, after gaining regulatory approval from the Guernsey Financial Services Commission. Monument Re is a Bermuda-based reinsurer that was established to operate as an asset intensive reinsurer and acquirer in Europe. Bedell Cristin’s Guernsey team, led by Partner Richard Sharp and assisted by Managing Associate Lee Osborne, provided corporate and regulatory advice, working alongside lead counsel for Monument Re Travers Smith. Carey Olsen’s Guernsey investment funds team and fund administration specialist Private Equity Administrators have assisted Creandum on the establishment of Creandum V, a €265m venture fund focusing on early-stage opportunities across Europe. Creandum V was heavily oversubscribed and had recommitments from all institutional investors in Creandum IV, while attracting new investors, primarily from the US. Like its predecessor, the new fund will provide early-stage investment for European technology companies. The Carey Olsen team advising on all Guernsey aspects of Creandum V’s structuring, establishment and closing was led by Partner David

Crosland, with assistance from Senior Associate Chris Hutley-Hurst. Collas Crill’s Guernsey office has helped to secure the lease agreement between Premier Inn and developer Comprop to start the construction and development of the hotel chain’s first property on the island. Jason Green, Partner and Head of the firm’s Guernsey property team, has worked with Comprop to draft, negotiate and finalise the agreement for the lease. After long negotiation, Comprop, which owns the land at Admiral Park, has been given the go-ahead to construct the 100-bedroom hotel – the first to be built in Guernsey for many years. The project is due to complete in December 2021. PraxisIFM is providing fund administration, governance and AIFM support to the Aquila European Renewables Income Fund, a UK-domiciled investment trust investing in renewable energy infrastructure investments across Europe and Ireland. The fund raised €154.3m in its initial public offering and started trading on the Main Market of London Stock Exchange on 5 June. While PraxisIFM in London is providing fund administration and governance services, the fund’s Alternative Investment Fund Manager (AIFM) requirements are being met by PraxisIFM’s Guernsey AIFM. Walkers has advised fund services provider Apex Group on two acquisitions in the Channel Islands and Ireland. Walkers advised Apex in relation to the closing of the financing and acquisition of the Corporate and Private Client Services (CPCS) and Throgmorton businesses of Link Group’s Asset Services division. This follows the recent acquisition by Apex of Ipes, in which Walkers was also engaged. The deals were led by Jersey Partners Jonathan Heaney and Alexandra Corner; Guernsey Partner Sam Shires and Senior Counsel Kim Paiva; and Dublin Partners Noeleen Ruddy and Brendan O’Brien. n

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News

Appointments Following the completion of ED Group’s acquisition of a majority stake in Stenham Wealth Management (SWM) in March this year, Jamie Crawford has been appointed to the board of Oakbridge, the new investment management business formed from the relaunch of SWM. Jamie joins the board having spent almost 10 years with ED Capital – the Jersey-based boutique trust company business owned by ED Group – as its founder and Managing Director. His previous experience includes working for a UK equity fund management company in Edinburgh before moving to Jersey in 2009.

Deloitte in Jersey has promoted Siobhan Durcan (pictured) and Theo Brennand to Partner. Siobhan runs Deloitte’s Channel Islands Real Estate Sector Group. Originally from Ireland, she has worked in Deloitte Jersey’s audit team focusing on financial services for over 15 years. Before joining the Jersey office in 2017, Theo spent 15 years with Deloitte’s audit team in London, having grown up in Hong Kong. As well as leading a portfolio of audit clients, he has advised on operational change, regulatory reviews, service auditor reporting and internal audit. As a Partner, Theo will lead Deloitte’s Private Equity and Asset Servicing groups in Jersey.

Intertrust has appointed Steve Carr to the role of Director, Private Wealth, with a brief to develop the company’s private wealth business. Steve, who previously spent almost 18 years with local fiduciary business Hawksford, has over 20 years’ experience in private client services and a broad knowledge of the market. He specialises in working with entrepreneurial and high-net-worth clients from a wide range of industries and sectors. Steve’s earlier career included periods with EY and RBC Wealth Management. He is also an Associate of the Institute of Chartered Secretaries and Administrators.

Estera has promoted Michelle Tring, formerly Associate Director at the firm, to Trust Director in Jersey. In her new role, she will oversee the private client team on the island. Michelle has more than 15 years’ experience providing fiduciary services to private and corporate clients, working with a range of structures. She moved to Jersey in 2002 to pursue a career in finance and has been with Estera for the past five years. Previously, she worked for Dominion Fiduciary and also spent a two-year period working for RBC in Grand Cayman, managing a portfolio of structures for predominantly Latin American clients.

Frederik van Tuyll has joined the board of Ocorian as Chairman. Over a 25-year career, Frederik helped build owner-managed business Pierson, Herding & Pierson across the Asia Pacific, based in Hong Kong, before joining Equity Trust as Head of Asia, then CEO, of the group. Following the merger of Equity Trust and TMF Group, he became Chief Operating Officer of the combined business before taking over as CEO, leading the business through a period of expansion. In his new role, Frederik succeeds David Thorpe, who has been Chairman since the 2016 Inflexion-backed management buyout.

edwood Offshore has appointed Paul R Robinson as Head of Financial Crime. Paul will join the firm’s compliance and antimoney laundering consultancy team, advising businesses in Guernsey most at risk of enabling money laundering on managing financial crime risks. He will also oversee Redwood’s provision of outsourced money laundering reporting officers, money laundering compliance officers and nominated officers. Paul was most recently employed by the Guernsey Financial Services Commission as an Assistant Director in the financial crime division.

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News

Standard Bank Jersey has appointed Charles Molteno as Chief Executive of Standard Bank Jersey and Island Head Jersey. Charles, who is currently Head of Risk for Standard Bank Wealth International, takes over from Will Thorp, who retains the pan-island position of Chief Executive. Charles has more than 17 years’ experience with Standard Bank. Before joining Wealth International three years ago, he was Regional Head of Personal Business Banking Credit in Lagos. He has also held roles in portfolio management and business banking credit in South Africa. In his new role, he will oversee all activities in Jersey.

Hawksford has appointed Heather Wilkins as a Director in its Governance, Risk and Compliance team. Heather will focus on the group enterprise risk management framework, which includes a key role in the operation of jurisdictional risk committees, as well as the management of the group’s policy and procedure framework. Prior to joining Hawksford, Heather served as a Risk Director at Sanne Group for six years, having also been a Funds Director at the group. She began her career in audit and assurance at EY and qualified with the ICAEW before undertaking a secondment post in EY’s Geneva office.

Equiom Jersey has appointed Steve Le Seelleur as Managing Director. An associate of the Chartered Institute of Bankers, Steve brings more than 35 years of experience in the Jersey financial services industry to the new position. In his previous role as a Director at HSBC, also based in Jersey, Steve managed key group relationships in addition to contributing to the overall business strategy. At Equiom, he will be responsible for the overall operational effectiveness, performance and growth of the Jersey office, focusing on the development of the team and delivering client service.

Private client, corporate services and fund administration business Oak Group has named Paul Schreibke as Managing Director of its private client and corporate services business in Guernsey, subject to regulatory approval. Paul has more than 30 years’ experience in the taxation, trust and corporate sectors. He moves to Oak from Intertrust, where he has spent the past 28 years, latterly as Managing Director. In his new role, Paul will provide input into Oak’s strategy as it continues to grow following its formation in 2018 through the consolidation of Oak Trust Group, the Consortia Partnership and Kreston IOM.

IQ-EQ has named Alasdair McLaren as Head of Private Wealth for Guernsey. Alasdair, an experienced private wealth practitioner and a member of the IQ-EQ Guernsey management board, served with First Names Group since 2014 until SGG acquired the group in 2018, as Director of Client Services. Before being appointed to lead the Guernsey private wealth segment at IQ-EQ, he was Client Services Director, leading a team of private wealth practitioners specialising in asset protection and estate structuring for ultra-high-networth international families.

Christopher Reed has been promoted from Senior Counsel to Group Partner in Walkers’ Investment Funds & Corporate Group in Jersey. Christopher assists a broad range of clients, including international corporations, private equity investors, sovereign wealth funds, pension funds, investment managers, sponsors and administrators, on fund investment and regulatory matters. He joined Walkers in February 2018, after almost three years with Mourant Ozannes. Having trained in London, his earlier career included work in Moscow for Latham & Watkins and Allen & Overy.

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R E GU L AT I O N WATCH

Are we there yet?

10 july/august 2019

MALIN NILSSON

Managing Director, Duff & Phelps’ Channel Islands office

Eleven years since the financial crisis, there is a growing sense of regulatory fatigue among regulated firms. So what does this mean for the islands?

ne area that has dominated the regulatory environment globally, as well as in the Channel Islands, is anti-money laundering/ countering the financing of terrorism (AML/ CFT). Despite the manpower and expense devoted to compliance with AML regulations, trillions of dollars continue to move through the illicit economy. The key to fighting this is to ensure AML and CFT measures work. AML/CFT compliance is too often seen as an exercise in demonstrating adherence to and documentation of procedures, rather than risk reduction through intelligence gathering.

IS AML OVERRATED?

As Duff & Phelps’ 2019 Global Regulatory Outlook survey notes, when asked what changes would have most impact on global AML efforts, respondents gave less priority to AML/CFT procedures, instead citing improved coordination and information sharing among global institutions as being key. While the Channel Islands have implemented recent changes to their AML/CFT regimes to bring them in line with international standards, updating both their AML/CFT Handbooks, information sharing and transparency have long been a focus. Both islands implemented the Common Reporting Standard in the fight against tax evasion, and enhanced registers of beneficial owners for sharing of information with authorities have been introduced. To extend the concepts underpinning these initiatives, there will be an increasing focus on tax and global programmes – such as the OECD’s Harmful Tax Practices project, which addresses Base Erosion and Profit Shifting – and new substance requirements to go hand-inhand with efforts to improve transparency. Our view is that the focus of upcoming legislative and regulatory change will continue

to be on AML/CFT matters and transparency as the islands prepare for the next visit by MONEYVAL [the Council of Europe’s committee of experts on the evaluation of AML measures and the financing of terrorism]. In particular, the transparency agenda is likely to be dominated by the topic of a public register of beneficial owners of companies and the need to establish a public register of trusts, as driven by the European Union’s Fifth Money Laundering Directive. Firms will be required to focus on the execution of existing and new AML/CFT measures, as well as those related to information sharing and transparency, which will address concerns from a criminal perspective and a fiscal angle.

WALKING THE ACCOUNTABILITY TIGHT ROPE

Another key theme globally is the increase in the pace of implementation of accountability regimes by regulators, such as the Senior Managers and Certification Regime in the UK and the Manager in Charge regime in Hong Kong. The Channel Islands are no exception. Both islands have ‘fining’ powers that can be extended to individuals. This has led to a shift in what it means to be under regulatory scrutiny. As these regimes come into force, firms will have to be mindful of the balance between collective decision-making and personal responsibility. So, what might this mean for firms regulated in the Channel Islands? While Guernsey has imposed civil penalties on both firms and individuals in the past, Jersey has yet to do so. It remains to be seen how high or low the bar will be set. While governance has always been a key focus of both regulators, the prospect of individual penalties means that firms and individuals should review their governance arrangements and decision-making processes at both the collective and personal level.

AN IFC ARMS RACE

The world of finance and regulation is moving at what appears to be breakneck speed. As survey respondents now view New York as having overtaken London as the pre-eminent financial centre, with Brexit casting a shadow of uncertainty over the UK’s economy, Channel Islands firms must adapt and remain flexible. New York was ranked as the top financial centre by 52% respondents – up from 42% in 2018 and higher than London, which has dropped from 53% to 36% in a year. Both islands have a history of planning for the long term, in terms of how regulators adopt international regulation, and how firms react to market forces and diversify their client bases. Both the regulators and industry will need to continue along this path for the foreseeable future and, while we may never ‘be there yet’, the journey will be an interesting one. n

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Our mortgage experts master every detail All our mortgage experts in Guernsey are qualified to a high standard, holding a Certificate in Mortgage Advice and Practice. You can rest assured that they’re the right people to guide you through every step of securing your island home. Book an appointment to talk to your local mortgage adviser. Pop into our branch or visit overseas.barclays.com/mortgages

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. MORTGAGES ARE SUBJECT TO ELIGIBILITY AND STATUS. Barclays offers private and overseas banking, credit and investment solutions to its clients through Barclays Bank PLC and its subsidiary companies. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register No. 122702) and is a member of the London Stock Exchange and NEX. Registered in England. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank PLC, Guernsey Branch is licensed by the Guernsey Financial Services Commission under the Banking Supervision (Bailiwick of Guernsey) Law 1994, as amended, and the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended. Barclays Bank PLC, Guernsey Branch has its principal place of business at Le Marchant House, St Peter Port, Guernsey, GY1 3BE. May 2019. BD08535-06.

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CO M M E N T

The time to engage with China is now

12 july/august 2019

JINNY YAN

Chief China Economist, ICBC Standard Bank

Jersey’s and Guernsey’s comprehensive global relationships mean they are well placed to be a conduit to China’s deepening connectivity with the rest of the world – but they must build their profile there

t might seem obvious, but China is an opportunity to capture today, and businesses that have not awoken to this could lose out. China is the second largest economy in the world, with nominal GDP of over $13trn – nearly five times the size of the UK or France (both $2.8trn, according to latest International Monetary Fund data). Barriers to growth within a relatively domestically focused Chinese economy have been significantly lowered. China has become the largest consuming nation in the world, with its sights set firmly on the development of a consumer-based economy. The growth of emerging markets is changing the global economic order. So, when asked about the potential for Jersey and Guernsey to benefit from this economic powerhouse, the response has to be: act now to find traction. Offshore, mature financial centres such as Jersey and Guernsey can position themselves as partners to China, seeking to open up domestic markets. Nothing exemplifies this reach-out by China better than the Belt and Road Initiative (BRI), or New Silk Road. This means managing investment and wealth in a well-regulated and developed framework, abiding by international standards – the kind offered by the islands. Formally launched in 2013, China’s BRI spans Asia, the Middle East and Europe and aims to accelerate economic development, in China and across individual countries, through mutually beneficial increased economic connectivity. That means upgrading infrastructure and boosting sustainable growth for all involved. The BRI is evolving, drawing in partners from new regions and building connectivity with the rest of the world. BRI cooperation started with 65 countries, but has expanded to more than 150 countries and global organisations,

including mature markets. Within this, there is a place for Jersey and Guernsey. Already world renowned for their high-quality financial services, the islands have yet to find significant profile in China. This might just be about scale, but considering how highly they are considered as jurisdictions in areas such as wealth management, advisory services, trusts, and regulation and compliance, there is an opportunity in danger of being missed. A key element is the relationships Jersey and Guernsey already enjoy with other countries. The BRI is all about China deepening connectivity with many of these economic partners. Recent additions include Italy and Switzerland, and a programme of huge investment by China into Africa means the islands could, and perhaps should, be looking to leverage the benefits of their relationships. The islands have the capability to fill in gaps that exist in China’s early stages of financial and capital market development. Wealth management is relevant here – where domestic products are undergoing transformational reform in China, the islands have the regulatory, legal and institutional experiences to share, and the skill base to open up the potential of their neighbours to China. Europe remains their biggest trading partner, with long-term investments still pouring into the UK (despite Brexit). It is here, perhaps, that the islands can be the service providers of choice for Chinese investors into the UK, Europe and beyond.

PROACTIVE ENGAGEMENT

To start the process, Jersey’s and Guernsey’s profile must be raised in China. Achieving this largely depends on being aware of key cultural differences. Policy engagement should start with central government, supported by frequent local government-level dialogue. The work of the China-Britain Business Council and City of London is an effective model for how the islands can lift the profile of their financial services. While work is already being done by Jersey and Guernsey to develop this relationship with China, too often local firms see China as the future; a key partner to be fostered through their next generational plan. But China is today’s opportunity. The British Virgin Islands are recognised by Chinese entities, and their profile will only grow until other offshore jurisdictions begin to notice China’s growth. What is required is proactive engagement with China and an analysis of which financial services the Channel Islands can offer that are urgently needed today – what do they specialise in that will help China to achieve its own development priorities? But unless the islands engage now, the potential of initiatives such as the BRI will be lost. China is growing its economic horizons. So could Jersey and Guernsey. n

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We believe in building successful, long-term relationships. We are Butterfield.

At Butterfield, we specialise in assembling the best people, products and services to create bespoke financial solutions for wealth management and the financial intermediary market. It is a skill Butterfield has honed over 160 years in banking. Although much has changed over that period of time, our core values, entrepreneurial spirit and unrelenting focus on our clients’ needs, remains at the heart of everything we do.

Butterfield Bank (Guernsey) Ltd PO Box 25, Regency Court, Glategny Esplanade, St. Peter Port, Guernsey GY1 3AP www.gg.butterfieldgroup.com

To find out more about Butterfield’s personalised wealth management services, please contact one of our Business Development Advisers: GUERNSEY +44 (0)1481 711521 or e-mail Guernsey@butterfieldgroup.com JERSEY +44 (0)1534 843333 or e-mail Jersey@butterfieldgroup.com

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THE BAHAMAS • BERMUDA • C AYMAN ISL ANDS • GUERNSEY • JERSEY • SINGAPORE • SWITZERL AND • UNITED KINGDOM Butterfield Bank (Guernsey) Limited (“BBGL”) is licensed and regulated by the Guernsey Financial Services Commission (“GFSC”) under the Banking Supervision (Bailiwick of Guernsey) Law, 1994, The Protection of Investors (Bailiwick of Guernsey) Law, 1987 and the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000, each as amended from time to time. Company Registration No. 21061. BBGL is a participant in the Guernsey Banking Deposit Compensation Scheme. The Scheme offers protection for ‘qualifying deposits’ up to £50,000, subject to certain limitations. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details are available on the Scheme’s website www.dcs.gg or on request. Butterfield Trust (Guernsey) Limited (“BTGL”) is licensed and regulated by the GFSC under the Regulation of Fiduciaries, Administration Business and Company Directors, etc, (Bailiwick of Guernsey) Law, 2000, as amended. Company registration No 31645. BBGL and BTGL are both registered under the Data Protection (Bailiwick of Guernsey) Law 2017 and are registered for the purposes of The Companies (Guernsey) Law 2008. Their registered office is P.O. Box 25, Regency Court, Glategny Esplanade, St Peter Port, Guernsey GY1 3AP. Butterfield Bank (Jersey) Limited (“BBJL”) is regulated by the Jersey Financial Services Commission to conduct deposit taking business under the Banking Business (Jersey) Law 1991 (as amended), investment business, fund service business and money service business pursuant to the Financial Services (Jersey) Law 1998, (as amended). BBJL is registered under the Data Protection (Jersey) Law, 2018 and is registered with the Jersey Registrar of Companies for the purpose of the Companies (Jersey) Law 1991 (as amended). BBJL’s registered office address is St Paul’s Gate, New Street, St Helier, Jersey JE4 5PU. Company registration number 124784. BBJL is a participant in the Jersey Bank Depositors Compensation Scheme. The Scheme offers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the Scheme and banking groups covered are available on the States of Jersey website www.gov.je/dcs, or on request. BBGL, BTGL and BBJL are wholly-owned subsidiaries of The Bank of N.T. Butterfield & Son Limited. Photo by Lachlan Dempsey on Unsplash.

DAVID PARKER

Executive Director of Business Development – Financial Services, Bahrain Economic Development Board

The recent Memorandum of Understanding between Digital Jersey and the Bahrain Economic Development Board shows that isolationism in the financial services sector is a thing of the past

he Central Bank of Bahrain finalised rules for regulating and licensing cryptocurrency asset services in February – a Middle East first. It can be seen through the lens of innovation, central to the kingdom’s aim to be a regional hub for all things crypto and blockchain. We at the Bahrain Economic Development Board have worked hard to position our historically strong financial services sector as the go-to destination for digital disruptors and start-ups. And with an expanding and increasingly vibrant digital economy, a developing tech community and a rapidly growing fintech ecosystem, recent initiatives mean we have never had more to offer. In 2017, the Central Bank of Bahrain (CBB) established the region’s first onshore regulatory sandbox. A framework to provide a virtual space for companies to test their technology-based innovative solutions, it provides an opportunity for companies to launch products into the market relatively risk free. We’ve already had successes. The region’s first Sharia-compliant cryptocurrency exchange, Rain, graduated from the CBB’s sandbox this year and is in the final stages of the application process for obtaining a full operational licence. Tarabut Gateway, the sandbox’s first graduate, has just signed an open banking technology agreement with the National Bank of Bahrain, taking advantage of new open banking reforms.

JOINING FORCES WITH JERSEY

Yet, while we are making good progress in digitising our financial services industry, we recognise the need to internationalise our outreach, cooperating with established markets to learn more and adapt initiatives accordingly. It’s against this backdrop that representatives from Bahrain’s financial services sector visited

14 july/august 2019

the UK, to attend Innovate Finance’s Global Summit, and Jersey, to sign a Memorandum of Understanding (MoU) with Digital Jersey. In many ways, Jersey and Bahrain are natural partners. Both are agile, nimble and innovative financial services hubs that understand that cooperation is crucial. The MoU is designed to enhance mutual learnings and deepen ties between the jurisdictions. It will give fintech companies in Jersey unparalleled access to, and cooperation with, the Bahrain fintech ecosystem and facilitate the exchange of information to drive growth and job creation. MENA Research Partners forecasts that investment in fintech firms will rise from $150m to $2bn over the next decade, as increasing interest in digital offerings from banks and government initiatives – including accelerator programmes in Bahrain, Dubai and Abu Dhabi – support the market. So the benefits of sharing knowledge and expertise are clear to both parties. The Middle East’s first, and still largest, fintech hub – Bahrain FinTech Bay – is a good example of this. Bringing together experts from technology and financial services in a structured and coordinated way can benefit all those involved and the broader fintech ecosystem.

AN EVOLVING SECTOR

Such a comprehensive agreement between two leading jurisdictions in the fintech sector is a significant development in the world of financial services – but not just in Jersey and Bahrain. It also demonstrates that there is no doubt the financial services sector has changed. It is no longer the place of ruthless competition that undoubtedly contributed to the global financial crisis of 2008. It has evolved into a world where the terms ‘partnership’ and ‘collaboration’ are commonplace. Bahrain has certainly recognised the importance of collaboration, particularly on an international scale. The CBB already works alongside the Jersey Financial Services Commission in the Global Financial Innovation Network. This international partnership between regulators from over 16 jurisdictions – including the UK, Guernsey, US, Australia and Hong Kong – is working to design supportive fintech regulatory pilot schemes. And Bahrain has signed a similar MoU with Singapore. Like Jersey, Bahrain aims to be a regional trendsetter when it comes to all things fintech. The MoU not only solidifies a burgeoning relationship, but it also opens the door for joint projects and further agreements in the future. In particular, it encourages more women to join the sector, which is an initial focus of our cooperation. Looking forward, I can’t help but feel that, for us, collaboration might just be the key to many more opportunities and initiatives in the world of fintech. n

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CO M M E N T

‘Collaboration’ is the new ‘competition’ for the financial services sector

CORPORATE

FUNDS

TRUSTS

BERMUDA BVI CAYMAN ISLANDS GUERNSEY HONG KONG ISLE OF MAN JERSEY LUXEMBOURG MALTA MAURITIUS UNITED KINGDOM

World class fiduciary and administration services With 550 experienced professionals across 11 offshore and onshore jurisdictions, our people are the stars of our business. Collaborative, experienced and armed with substantial technical expertise, they provide quality solutions to your specific requirements. Call Jersey on 01534 844 844 or Guernsey on 01481 742 742 to find out more. estera.com Follow us

Regulatory information is available at estera.com

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july/august 2019 15

How to avoid the pitfalls of closing a fund

CO M M E N T

These should be underpinned by experience and background knowledge. Following a number of key steps can help:

SHARIFAH MORRIS

FCCA CPI, Director, Offshore Restructuring

Managing a fund can be emotional – the launch exciting but winding it down frustrating. Here’s how to ease the pain

losing a fund requires planning, experience, resource and cost, especially if the structure involves multiple jurisdictions or holds illiquid assets. The experience may leave investors and fund managers frustrated, especially by the cost. So how can it be avoided? It’s simple: preempt the pitfalls that cause delays, incur costs, increase workloads and make the exit process painful. There are four main pitfalls: 1. Warranty or guarantee beyond closure The company may go through a sale process prior to closure. The sale agreement usually includes guarantees lasting years, so unexpired obligations under the warranty mean the company is not unencumbered from future claims, which will cause delays at closure. 2. Illiquid investments These securities or assets cannot easily be sold or exchanged for cash without a substantial loss in value. Generally, these investments are written off, but in some situations they may still generate investment income. The company must be kept active to continue to receive this income. 3. Ambiguous terminology In some cases, the closure process is not clearly set out in the incorporation documents – for example, how unclaimed dividends are to be dealt with and how illiquid investments should be treated. 4. Lack of skilled resources It is common for businesses to focus resources on new business and launching new funds. As a result, the closure team is often short-staffed and overloaded with problematic issues, which will cause delays and increase the potential for costly mistakes.

TIPS FOR A GOOD SEND-OFF

To wind down a fund, three basic principles apply – planning and communication; documentation; and management decisions.

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1. Planning and communication The more time spent planning, the better the outcome. Be transparent with your closure plans and get investors onside. Develop your plan of closure like any project plan, considering tax and regulatory issues. Agree your project leader, task assignment and costs of service providers. Decide how best to communicate with investors from start to finish – such as via your online investor portal – and how often. And bear in mind the costs of managing expectations. 2. Documentation Ensure fund documents are clear about the end-of-life process, who will be responsible for winding up, which regulations apply and in which jurisdiction. Documents for circulation must be agreed commercially and clearly to avoid confusion in the future. Analyse the fund documents – does the fund have any contractual obligations to underlying investments? Ensure this is understood so that fund managers don’t overpromise on delivery, timing and distribution amount. 3. Management decisions Even if you have liquid assets, many decisions must be considered, documented and communicated when closing a fund. Is your sale price fair? Do you need to appoint a liquidating trustee to transfer illiquid assets? Do you need to cancel the tax registration? Some service providers may lose interest as a fund is closing down as there will be no continuing prospects. Consider staff and post-winding-up service retention to deal with the closure process. Understand the fund manager’s contract and obligations to close down the fund. Plan and agree on information and data preservation and access after closure. Consider insurance cover for contingent liabilities and unexpired warranties.

SUCCESSFUL CLOSURES

The key to a successful fund closure is about anticipating the closure at the earliest stage, with a well-developed plan and transparent and continuous communication. After this, moving ahead will be much easier. n

Sharifah is running free training courses on fund closures for Businesslife readers. To find out more, email sharifah@offshore.gg The views and opinion expressed in this article are those of the author and do not necessarily reflect the opinions, position, or policy of Offshore Restructuring or the Offshore Group. This article is for general information and is not intended to be and should not be taken as financial advice.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. MORTGAGES ARE SUBJECT TO ELIGIBILITY AND STATUS. Barclays offers private and overseas banking, credit and investment solutions to its clients through Barclays Bank PLC and its subsidiary companies. Barclays Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register No. 122702) and is a member of the London Stock Exchange and NEX. Registered in England. Registered No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP. Barclays Bank PLC, Jersey Branch is regulated by the Jersey Financial Services Commission. Barclays Bank PLC, Jersey Branch is regulated by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law 1987, as amended. Barclays Bank PLC, Jersey Branch has its principal business address in Jersey at 13 Library Place, St Helier, Jersey JE4 8NE, Channel Islands. May 2019. BD08535-06.

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No matter which countries are involved, we’re experienced in understanding each country’s rules

It is common for families to send their children to a US college, after which many take up careers and residency in the US. In such cases, a US domestic trust can be set up, making the assets available to family members in different parts of the world. This is often necessary for blended families with offspring from different branches of the family in the US and elsewhere. For estate planning, the older generation wants their wealth to be accessible to family members round the globe, but to keep the funds in their country of origin. Chris McCallum, Trust Specialist, Client and Business Development, with RBC Wealth Management in London, says: “If the money is transferred directly to the heirs, when the heir dies the funds would be subject to an estate tax – for example, an inheritance of $20m could be subject to an estate tax in excess of $3.5m.”

The trust structure is preferred for several reasons, particularly preserving assets. “A trust for adult offspring can be set up to control spending by heirs and avoid any issues with spendthrifts,” says McCallum. Similarly, trusts can be used to direct assets to specific family members and protect them in a divorce. Assets in a trust can also provide protection from becoming part of an individual’s estate in the event of a bankruptcy. “Trusts work well as a planning technique for generational wealth transfer and for US residents for tax purposes,” says McCallum. When family members are in multiple countries, McCallum adds, it often makes sense to establish multiple trusts. “You always want to separate out the US beneficiary and establish a domestic trust to meet US rules,” he says. “Establishing a separate foreign trust for non-US residents allows for greater flexibility in the types of investments you can make.” McCallum says the countries with the most complicated rules for establishing trusts are the UK, Canada and the US. “No matter which countries are involved, we’re experienced in understanding each country’s rules,” says McCallum. “But we have all our clients engage legal advice and tax advice in their country and the country where they want to establish a trust.” Managing the complexities of estate planning for blended families can be a challenge. When family members reside in a variety of countries, that extra layer of complication requires creative solutions while meeting each person’s needs. n

FIND OUT MORE

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Interview

JTC’s shared ownership model has been at the heart of the firm’s 30-year growth story, which has seen it go through owner management, private equity backing and, most recently, a London listing. Now, the approach has earned it case study status on Harvard Business School’s MBA course. CEO Nigel Le Quesne is, quite rightly, feeling rather proud Words: Eila Madden Pictures: Glen Perotte

What impact has that ownership model had on the business – and has the model been affected by JTC going public in March 2018? Everybody who works for JTC remains an owner of the business and, as a listed business, we have an internal key performance indicator of trying to keep that ownership at around 25% of the total share capital. I think the model creates a bond that is different from a normal employer/ employee scenario. Everybody feels that they’re part of something. As a result, we

20 july/august 2019

never really see a nine-to-five mentality from our people, the principle being that we all own part of the business and we’re all in it together. We spend a lot of time making sure the model is meritocratic, so that everybody builds up the value they hold in the business over the period of time they’re with JTC, based on their performance and seniority. It’s been very successful – so much so that we’ve been recognised by Harvard Business School’s MBA course. They’ve chosen our business as being unique in how we’ve dealt with shared ownership and we’re being featured as a case study in the first semester of the next academic year. I also have the honour of taking part in the first couple of lectures in Boston. In a nutshell, what does JTC do? We’re a fund administration business and a trust company. We help individuals, families

we never really see a nine-to-five mentality from our people, the principle being that we all own part of the business and we’re all in it together

and institutions to administer, manage, grow and preserve wealth in a responsible and sustainable way. But, probably most important for me, we concentrate on client service excellence with an emphasis on surpassing expectations rather than just doing what’s required. On the institutional side of the business, we’re now a major global fund administrator with a wide range of clients – from first-time fund managers right up to some of the world’s largest institutions. This is across a range of asset classes, which includes private equity, real estate, infrastructure, renewable energy and, more recently, fintech. On the corporate side, we provide services to a number of multinationals. Included in that will be some employee benefit-type structures and we’ve used the expertise of running our own employee ownership schemes to help and advise others with that. And for clients that are individuals and families, we’ve become a sophisticated provider of services to family and private offices, acting for many as the manager of all their individual advisers. Some of those clients have been with us for over 25 years. Recently, you celebrated your first anniversary of being listed on London Stock Exchange. Why did you decide to go public? We had a really good relationship with our private equity backers at CBPE, but we’d come to a natural end of their target investment period. More importantly, we were probably growing beyond their capacity to support us, so it was time to look at a new stage in our development. There had been similar companies from our sector come to the market, both in the Netherlands and here in Jersey, so the understanding of the dynamics in our market had become more sophisticated among the investor community. But most

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What’s your background and how did you get to where you are now? I’m Jersey born and bred. At the start of my career, I spent a 10-year stint with the civil service here in Jersey. During that time, I qualified as a chartered secretary and joined PwC – that would have been in the late 1980s. And then a couple of years after that, I joined what is now called JTC as its fifth employee. It was there that I began to understand the dynamics and the potential of the trust sector. It was around that time that I experienced a challenging life event. I lost my first wife in 1996 and I think the grieving process added a little bit of strength to my character. I tried to channel that into something positive by focusing on creating and growing a different type of organisation from what was around at the time – that organisation eventually became what JTC is today. How did that manifest itself? In the late 1990s, I implemented a model where everybody was an owner of the business – we hear a lot about that today, but it wasn’t as common back in those days. It’s based on the fundamental tenet that if you allow people to share in the benefits of growing a successful business, the business itself will be stronger and the service provided to your clients will be better.

Interview

The

interview Nigel Le Quesne www.blglobal.co.uk

july/augusT 2019 21

Interview

importantly, we were keen to retain our independence and protect our staff ownership. The listing allowed us do that.

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In a listed environment, you’re priced by the second and it tends to revolve around the half-year and full-year results, so there’s intense activity around those times

challenge because I like to roll up my sleeves and help with client relationships and driving operational excellence for the business as a whole.

you’re hired in, it’s quite clear from the beginning that this is our approach to business. That helps me to stay in touch with how things are being run.

Bearing in mind so much of your time is now taken up with PLC-related duties, how do you manage to stay in touch with what’s happening on the frontline with employees, the business and with clients? Over my 30-year history with the business, I have ushered in many of those clients over time myself, so I don’t feel too far detached from the business. Obviously, year-on-year, new clients come in and when we acquire businesses I know those clients less well. However, I think that, because of the experience I’ve had in the industry as a whole, I feel close enough to it. There’s also very much a ‘JTC way’, which has been honed over these 30 years or so. Whether you join by acquisition or

What is the ‘JTC way’? From the moment someone arrives, we take them on a journey with us and they develop as they go through it. So, all the time, we’re building our future leaders through what we call the JTC Academy. Our JTC Gateway initiative gives people the opportunity to develop their careers in different parts of the world or other parts of the business. And we’ve recently introduced JTC Wellbeing, which helps our people take a holistic approach to their physical and mental health. Shared ownership is at the heart of the JTC way. When people join us, they can expect to become an owner of the business, be treated fairly at all times, have equal opportunities in every respect and operate

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How has that first year of being listed changed the business? On the whole, it’s been an overwhelmingly positive change for the business and a bit of a coming of age. We’ve grown into being a business worthy of being listed on London Stock Exchange – it’s definitely raised our profile in a positive way. In terms of our structure and operations, they haven’t changed much because JTC has always grown organically and by acquisition, and we’ve added to our infrastructure as we’ve gone along. So it’s building on 30 years of success. And, of course, as you go from being a locally owned and managed business through to being private equity backed and so on, there’s a natural scaling up of your firepower as you go. Having said that, from a personal point of view, I certainly have to spend more time on our being a PLC – probably around three months of the year. You have to get to know a whole new investor base and understand the dynamics of the public markets. Private equity tends to work on a five- to seven-year cycle and you’re ultimately judged on the price you achieve at the end. In a listed environment, you’re priced by the second and it tends to revolve around the half-year and full-year results, so there’s a lot of focused and intense activity around those times. The time this takes away from the day-to-day running of the business is a

ogier.com

We get straight to the point, managing complexity to get to the essentials. Every piece of work is a collaboration. We listen actively, asking the right questions, focused on what really matters. We deliver targeted, pragmatic advice with absolute clarity. To the point. Legal Services British Virgin Islands Cayman Islands Guernsey Hong Kong Jersey London Luxembourg Shanghai Tokyo

Interview

in a meritocratic environment. In return, there’s an expectation that they put the company before them individually, for the most part. That drives entrepreneurial behaviours around getting things done – winning and over-servicing, rather than under-delivering. It also encourages people to maximise their individual potential. If we can’t help them to do that, then we’re failing them in some way. This whole approach drives us to get bigger and better every year, and retain the best people on the journey. After your first year as a listed company, you reported 30% growth in revenue. Is that linked to the listing or were you on track to do that anyway? Taken in isolation, it does look like a particularly good year, but several things actually came to fruition at the same time. We’ve got a two-pronged approach to growth. We look to grow organically on a net basis of between 8% and 10% a year. Also, since 2010, we’ve become an accomplished acquirer of businesses. We’ve learnt to work out what ‘good’ looks like in terms of an acquisition, especially value for money and cultural fit. It’s important to remember that whenever we make an acquisition, we’re inviting these people in as partners and keepers of our culture. So those are the two levers we pull on each year and we expect both to improve our performance – which clearly they did in our first year as a listed business. What will your growth strategy be going into the future? We’ll continue to keep it simple. We expect net organic growth from our existing book of 8%-10% a year and everyone’s targets are built out that way. And then we will look for one or two acquisitions a year. As I’m sure you know, it’s a rapidly consolidating market and to a large degree I suspect that over the next decade or so we’ll end up with perhaps only five to 10 global players. My expectation is that JTC will not necessarily be the biggest, but we will be the best of those from a service and performance point of view. So, it’s about finding the right acquisitions and opportunities in the right geographies, and paying fair prices for them. Our operational departments – finance, IT, business development and marketing, legal, HR and facilities – all play an important role in making sure we integrate businesses as quickly as we possibly can. What’s your approach to successful integration – because that’s often where M&As run into trouble? We’re very quick to try to make offices we acquire look and feel like all of our JTC

24 july/august 2019

Calling ourselves a trust company was limiting as well, because we’re typically around 70% institutional business, a big chunk of which is fund administration services. So we evolved into JTC around 10 years ago – though we’re very proud of where we’ve come from. Do you see the brand evolving further as you continue to grow? I think the brand awareness is at a point now where, even if we wanted to change it, it would be difficult because, in our market, people instantly recognise the JTC brand along with some of the other global brands that are out there.

FACT FILE Name: Nigel Le Quesne Age: 58 Position: CEO, JTC Home town: Jersey First job: Deck chair attendant on St Brelade’s beach Family: Married to Annie, with two daughters, Loren and Lara Hobbies: All sports, but particularly Tottenham Hotspur Did you know: Nigel co-produced the 2010 England World Cup song Shout for England

offices. At the very least, we’ll use the JTC brand alongside a local brand. Obviously, all of the staff become owners immediately. There’s always the potential for some tension, but I think it’s as well organised as it can be, given that we’re doing two or three deals a year and some of those deals will be multi-jurisdictional. It becomes slightly more problematic when you’re layering a management team over or alongside an existing management team – it takes a certain amount of skill to make sure that you get cohesion as quickly as you can. It’s slightly easier when you’re acquiring in a new territory, of course, because, generally speaking, that management team ends up running that jurisdiction. How has your brand evolved as you’ve moved from a local to a global company through acquisition? JTC was originally Jersey Trust Company, but as we became a global business, we didn’t necessarily want to be associated with just one jurisdiction.

Looking ahead, what challenges is JTC facing? Will Brexit have any impact on you as a London-listed company? It’s definitely a complicated topic and it’s been running for far too long. In my view, the inability to make a decision on how to go about it has been quite negative, not specifically for our business but for the UK as a whole. Personally, I thought holding the referendum was a poor and ill-informed decision – never ask a question unless you’re ready for the wrong answer. However, bringing it back to JTC, we’re in 18 jurisdictions, some of which will benefit from Brexit – Luxembourg and the Netherlands, for example. It will make the world more complicated and more difficult to do business in, but in that difficulty often comes opportunity for a business like JTC. So I don’t think we’ll be particularly adversely affected by it. As for London, I think that London is a world city which just happens to be in the UK. It’s a global financial centre that clearly leads the European financial centres so, in all honesty, I don’t believe London’s role will diminish significantly. And what about for the trust sector as a whole? Will consolidation continue to be the main story going forward? I’m not a believer in getting bigger for bigger’s sake but, clearly, it’s harder for a single-jurisdiction player to stay in the business. Even if you have a small international presence, the size of the competitor landscape can be a bit overwhelming – particularly if you have to become an expert in a much wider field than just your local one. I think the trick is to make bigger better as opposed to just becoming bigger. I don’t doubt that in 10 years’ time there may be a move back towards more local boutique-type regional firms, or ones that focus on a specific jurisdiction or skill set. But I still see this consolidation trend for the foreseeable future, possibly driven by more listings coming down the track and private equity interest. n

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Appleby’s Channel Islands team of legal specialists advise global public and private companies, financial institutions, and high net worth individuals, working with them and their advisors to achieve practical solutions, whether in a single location or across multiple jurisdictions. Appleby Guernsey +44 (0)1481 755600 guernsey@applebyglobal.com

Appleby Jersey +44 (0)1534 888777 jersey@applebyglobal.com

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Should you invest in family-owned companies? With new research showing that family-owned companies return three times more than their non-family counterparts, investors may want to explore this option more closely, says Lee Morris, Investment Director in Quilter Cheviot’s Jersey office

WHAT DIFFERENCE DOES it make

investing alongside a family naturally leads you to invest in companies that are focused on the long term

26 july/august 2019

who owns a company? In theory, it shouldn’t matter at all. Any investor in a company wants to make a good return, regardless of who they are or the organisation for which they work. The data, however, suggests something different. Investors in family-owned companies have historically enjoyed above-average returns. A recent study from Credit Suisse found that family-owned companies had returned three times more than their non-family-owned counterparts since 2006.1 While the Credit Suisse data only goes back 10 years or so, there is wider evidence that suggests family-owned businesses tend to do better. They are at the heart of economies such as Germany or Italy, and there are also successful family businesses in Jersey, including Seymour Hotels.

WHY DO FAMILY-OWNED COMPANIES DO BETTER? Put simply, family-owned companies tend to take more of a long-term approach to their business. They focus more on investing in their business over the long term, and put money into developing new products and opportunities. The idea that families run their businesses for the long term is not just based on theory. As Credit Suisse has

discovered, greater family ownership ‘tends to increase the use of longerterm financial targets for management remuneration, and family-owned companies prefer conservative funding structures for investments’.2 In other words, investing alongside a family naturally leads you to invest in companies that are focused on the long term. As an added benefit, these companies are less likely to take on excessive or highcost debt, making them more stable in the event of an economic downturn.

ARE THERE ANY DRAWBACKS? Family-owned businesses still carry the usual risks of investing – your money can go down as well as up. Some have raised more specific concerns too. To begin with, there is a risk that families retain too much control, especially if they have extra voting rights or control over the management team. When Credit Suisse looked at this issue, it didn’t find much evidence to support this though. Returns for family-owned companies with a disproportionate say were slightly worse in Europe and Asia ex Japan, but better in the US. While special voting rights are a risk to watch for investors, they don’t appear to be a reason to avoid family businesses entirely. You also want to consider the regional

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Family-owned companies can be a good hunting ground for income investors, because the founders are often as keen on receiving a sustainable income as other investors

biases that come with investing in familyowned companies. The majority are found in Asia ex Japan, with this region making up about half the global total of familyowned businesses. Europe comes in at 23% of the total and the US at 12%. This is a very different country breakdown compared with global equity markets, with the US accounting for about half the value of all publicly traded companies in the world.

HOW CAN I INVEST IN FAMILY-OWNED BUSINESSES? There are several options if you want to invest in family-owned companies. In terms of actively managed funds, Richard Pease at FP Crux specifically looks for companies with family ownership or some type of founding interest. Around 40% of

the European Special Situations Fund has exposure to these types of companies. Another example is the Matthews Asia Pacific ex Japan Dividend Fund. Familyowned companies can be a good hunting ground for income investors, because the founders are often as keen on receiving a sustainable income as other investors. There are also a number of tracker funds offering exposure to the theme of family-owned businesses. I would add a note of caution for these – the Credit Suisse data is selective on the type of companies that qualify for its group of businesses, so the broader performance of a passive vehicle might not match the returns Credit Suisse has calculated. But with this caveat in mind, playing happy families is something investors may want to explore more closely. n

FIND OUT MORE

For more information please contact: Lee Morris, Investment Director, Quilter Cheviot (Jersey office) at lee.morris@quiltercheviot.com

1 The CS Family 1000 in 2018, Credit Suisse Research Institute, page 5 2 The CS Family 1000 in 2018, Credit Suisse Research Institute, page 2

Investors should remember that the value of investments, and the income from them, can go down as well as up. Investors may not recover what they invest. Past performance is no guarantee of future results. Any mention of a specific security should not be interpreted as a solicitation to buy or sell a specific security. Quilter Cheviot Quilter Cheviot, part of Quilter plc, is one of the UK’s largest discretionary investment firms and can trace its heritage to 1771. The firm is based in 12 locations across the UK, Jersey and Ireland and has total funds under management of £23.7bn (as at 31 March 2019). Quilter Cheviot focuses primarily on structuring and managing bespoke discretionary portfolios for private clients, charities, trusts, pension funds and intermediaries. Quilter Cheviot Limited is registered in England with number 01923571, registered office at One Kingsway, London, WC2B 6AN, England. Quilter Cheviot Limited is a member of the London Stock Exchange; is authorised and regulated by the UK Financial Conduct Authority; has established a branch in Jersey and is regulated under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission for the conduct of investment business in Jersey and by the Guernsey Financial Services Commission under the Protection of Investors (Bailiwick of Guernsey) Law, 1987 to carry on investment business in the Bailiwick of Guernsey; is regulated by the Dubai Financial Services Authority as a Representative Office (and its business name in Dubai is Quilter Cheviot Limited (DIFC Representative Office)); and has established a branch in Dublin, Ireland with number 904906 and is regulated by the Central Bank of Ireland for conduct of business rules. Accordingly, in some respects the regulatory system that applies will be different from that of the United Kingdom.

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july/august 2019 27

Living overseas

How to be an expat Foreign travel, new cultural experiences, a global network of friends – the rewards of expat life can be many, but there is a knack to making it work

28 july/august 2019

Words: Len Williams

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Living overseas

1) BORING, WE KNOW, BUT STAY ON TOP OF THE PAPERWORK John Marcarian has spent most of his life outside of his native Australia and is the author of Expatland, a guidebook for setting up in foreign lands. “You should always plan your departure before you plan your arrival,” he explains. Marcarian stresses the importance of tying up loose ends, especially if you’ll be living abroad for an extended period. This might include completing any tax returns, selling assets, closing insurance policies or thinking about how you’ll move your money. Many expats forget to do this and end up having to get their affairs in order from the other side of the world. He also lists issues expats will encounter on arrival in their new home. “You’ll need to think about finding somewhere to live, choosing schools for your children, planning your commute and navigating the country’s insurance and health system,” he says. And he notes the importance of reading your new job contract. “Even if you’ve moved to work for the branch of your current employer, the local job contract might have some very different rules.” Marcarian emphasises the importance of working through this series of steps systematically – it will leave new expats with fewer surprises.

2) DO YOUR DUE DILIGENCE – AND THINK ABOUT LIFE BEYOND THE SETTLING-IN PERIOD “It’s really important to think long term,” says Andrew Brook, a British expat who moved to Guernsey to work at professional services firm Altair earlier this year. Brook previously spent 16 years as an executive at an accounting firm in Bermuda, where he and his wife brought up a young family. Raising children in a different country requires a lot of forward thinking, he explains. Not only might competition for school places be high, but you also need to consider your children’s long-term circumstances. “In many places, the expat child’s life is tied to their parents,” says Brook. If their parents are foreigners, children may not have

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rights of residence in a place, even if they’ve lived there much of their lives. This was part of the reason Brook and his family returned to the UK in 2013, as their children were finishing their education. When they were moving to Guernsey, he and his wife made sure they did this due diligence, researching the place well in advance. That said, he praises how quick and easy the island’s government has made registering and setting up on the island through its Locate Guernsey service.

3) IT MAY BE HARDER TO SPEND YOUR HARD-EARNED CASH THAN YOU THINK – BE PREPARED TO JUMP THROUGH A FEW HOOPS One issue that almost all expatriates encounter at some point is moving money to and from their home country. Especially if you end up working for a foreign firm abroad, it can be surprisingly tricky to get your money back home. Take property, for instance. Matthew Hillyer is a financial adviser at largemortageloans.com and specialises in helping expats who are already abroad to get mortgages for properties in the UK. Of the 200 or so major lenders in the UK, Hillyer says only around 25 will deal with expatriates at all, because of the complexity of their circumstances. And while some lenders are happy to work with expatriates living in stable places – such as the US and Europe – fewer will want to work with you if you’re living somewhere perceived as risky. It is possible to navigate these challenges – though there might just be a few more hoops to jump through. Jersey-based HSBC Expat offers banking services to people living and working abroad. The business’s Head, John Goddard, says one of the most common finance challenges that expats face is opening a bank account in a new country without having a credit history there. HSBC Expat holds its customers’ credit histories centrally in Jersey, allowing it to offer them banking services anywhere in the world. “Keeping and managing money in one central location, not having to worry about moving finances with every move, definitely makes moving around the world easier and, regardless of how politically unstable a country may be, those expats who bank with us know their money is safe,” Goddard says.

july/august 2019 29

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THE EXPATRIATE LIFESTYLE has an undeniable glamour. The opportunities to travel, to make new friends and explore different cultures is certainly attractive. But it has its downsides too. Whether it’s culture shock, bureaucratic barriers or financial obstacles, living abroad can be challenging. If you’re thinking of moving to a far-flung place or have just landed in the Channel Islands, here are some tips for being an expat from those who’ve been there.

Living overseas

31%

Expats in numbers 3%

The percentage of the global population formed by expats

1,000

(Source: Expatland)

The percentage of expats in Jersey who come from the British Isles; this number is down from 37% in 1981 (Source: States of Jersey)

The number of new people (mainly working) who migrate to Jersey each year (Source: States of Jersey)

10% 73

77%

The percentage of expats

Islands who % insaythetheChannel environment (air

The percentage of global GDP generated by expats

The percentage of expats in the Channel Islands who say they have a better work-life balance there than in their home country (Source: HSBC Expat)

82%

(Source: Expatland)

The percentage of expats in the Channel Islands who say they spend less of their days on trains or in cars (Source: HSBC Expat)

pollution, water quality) is better than in their home country (Source: HSBC Expat)

The number of years expats stay in the Channel Islands, on average; this is twice as long as planned, often because they have met someone to share their life with (Source: HSBC Expat)

4) NOW YOU’RE THERE, MAKE AN EFFORT TO FIT IN

research the local culture so you understand social cues in business and private life

30 july/august 2019

“Try and have at least one new experience with your family each month,” Marcarian recommends, “whether that’s eating fish head soup in Singapore or spending a day cycling around Jersey.” Besides the fact that such experiences are good in and of themselves, when you’re new to a place, it’s important to spend quality time with family, especially as your personal networks will be much smaller. That quality time becomes invaluable. Marcarian also suggests doing things that will help you get to grips with your new home, including signing up to language courses (assuming the local language is new to you), joining expat clubs

to meet likeminded people, and volunteering. He also recommends researching the local culture so you understand social cues in business and private life. “You have to put the effort in and get out there,” says Brook, who has just signed up to a Guernsey golf club. Especially in a new place it’s important to be active in trying to build a social network – you can’t just expect people to gravitate towards you. Happily, Brook and his wife have found their new home “very warm and welcoming” so far. n

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to be a director?

The IoD Certificate and Diploma in Company Direction is an internationally recognised benchmark for directors, providing a robust and challenging programme to meet the needs of today’s executives. This 13 day modular programme leads on to the prestigious qualification of Chartered Director. The 2019 programme will be delivered in Jersey on the following dates: 2 days | 9-10 Sept 2019 Role of the Director and the Board 3 days | 7-10 Oct 2019 Finance for Non-Financial Directors 3 days | 4-6 Nov 2019 Strategy for Directors 2 days | 25-26 Nov 2019 Leadership for Directors 3 days | 23-25 Sept 2019 Developing Board Performance To find out more call:+44 (0)1534 610 799 email: jedirector@localdial.com or visit www.iod.je

Regtech

Spending on technology to ensure compliance was once considered a grudge purchase – but now it’s shaping up to be the next competitive advantage

32 july/august 2019

Words: Amy Carroll

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Regtech

THE GLOBAL REGTECH industry is poised

WHAT’S ON OFFER? The menu of regtech solutions on offer is as rich and complex as the regulatory demands they serve. From client onboarding, Know Your Customer (KYC), identity management and anti-money laundering to operational risk management and regulatory reporting, the opportunity to increase automation and reduce human error is huge. Furthermore, regtech not only helps companies to adhere to compliance guidelines, it also acts as an early warning system to proactively spot potential threats, including fraud. And it isn’t just financial services that’s benefiting. The sector has been subjected to the lion’s share of post-crisis regulatory burden, certainly, but it is far from the only regulated industry. “Data protection laws, company law, health and safety – unprecedented demands are being placed on all types of business,” says Peter Mills,

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the opportunity to increase automation and reduce human error is huge

Chairman of Active Optimus Group, a Guernsey-based corporate governance and regulatory compliance services provider. Regtech solutions are being delivered by a combination of incumbents and a rapidly proliferating start-up universe. Annual global investment in regtech businesses grew fivefold between 2014 and 2018, reaching just under $4.5bn last year, according to Regtech Analyst. Indeed, the first regtech unicorns are now starting to emerge, with data protection specialist Netskope, valued at over $1bn, and Rubrik, valued at more than $3bn, among their number. The sums of money being amassed in different segments reflect the regulations creating the most headaches. Just over a third of all funding went to KYC solutions in the four-year period, with just under a third targeted at anti-money laundering. Data protection regulations and MiFID II proved the third and fourth most popular. The competitive regtech landscape is still evolving, and it remains to be seen whether start-ups or incumbents will dominate. For now, we are seeing myriad point solutions but, over time, we can expect full regulation platforms to emerge. “At the moment, organisations have to buy multiple pieces of software and that can be difficult to manage,” says Os Lopes, a Director at Jersey-based fintech company InfrasoftTech. “The big winners will be providers that can deliver a one-stop shop.”

EMERGING TECHNOLOGIES Regtech has been fuelled, in large part, by the incredible pace of tech advancement we have experienced over the past decade. To date, cloud computing has proved the most disruptive force. But that transition to cloud is a precursor to other transformative regtech approaches that are now starting to gain traction. Data analytics, machine learning,

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for explosive growth. Corporate investment in technology solutions designed to help companies understand their regulatory requirements and stay compliant is expected to climb from $18bn last year to a massive $115bn by 2023, according to Juniper Research. The marriage of technology and regulation is nothing new. But this tsunami of spend can be traced back to the global financial crisis. A confluence of the emergence of fintech as a disruptive force and the unprecedented barrage of rules that were unleashed in an attempt to tame the financial services beast set the scene for the growth we see today. It is estimated that some 60,000 compliance documents have been written since the crisis – from Dodd Frank to Basel II, from EMIR to MiFID II – creating a labyrinthine web of regulation that compliance teams fuelled on manpower alone have struggled to navigate. “At a time when financial returns on investment have been hard to generate, financial services companies have had to focus on reducing operational overhead costs,” says Mark Le Page, Advisory Director at EY in Guernsey. “That’s driving the current explosion in regtech spend.” And it’s not just expanding compliance functions that are adding to operational overheads – globally, HSBC increased the size of its compliance team from 1,600 to 9,000 between 2011 and 2016 – but the spectacular cost of getting it wrong. In the 10 years following the onset of the financial crisis, banks across the world have paid in the region of $321bn in fines, according to Boston Consulting Group. Manual processes and legacy systems simply no longer suffice.

july/august 2019 33

Regtech

Navigating the regtech solutions market Solution

What it does

Providers*

Market surveillance

Allows institutions to monitor participants and identify illegal actions based on trade data, money transfers, market information, newsfeeds, chat and email, combining advanced data analysis with behavioural science to provide a faster and more efficient way to manage behaviour.

Ancoa, Sybenetix

Regulatory reporting

Involves combining many sources of data into one complete dataset. Regulatory reporting has been developed to address information source inconsistencies because of the large number of incomplete and false datasets.

Fintellix, Modelity

Stress testing/capital planning

Allows institutions to test scenarios to manage risks, taking into account the required capital and book pressure tests.

AlgoSave, Ayasdi, Suade, Percentile

Fraud detection

Uses tools to identify verifications and warnings of suspicious activity. These tools allow institutions to use dynamic data sources and complex analysis to validate individual transaction or account openings, monitor and detect fraudulent activities.

Netguardians, Risk Ident

Cybersecurity/ data privacy risk management

The specific provisions of cybersecurity and vendor liability place the responsibility on financial institutions to be responsible for their vendor systems as well as their own needs. These tools meet this need to monitor external vendors and external third-party partners operating outside the company.

Alyne

Controls automation

Automates interpretation and application of regulatory rules and oversight of internal processes in order to flag potential issues.

Capnovum, Continuity, Droit, Quarule

Risk management

Tools to enable companies to better address risk management on front-end operations such as trade limits and risk calculations.

AlgoDynamix

Client due diligence/ Know Your Customer

Makes client onboarding more efficient by taking advantage of the growing role of mobile devices to capture digital information for the purpose of identity verification. Unique identifier or blockchain technology has a potential role here.

ComplyAdvantage, Fenergo, PassFort * Provider lists not exhaustive

artificial intelligence (AI), natural language processing and distributed ledger technologies are all being embraced as a means of handling massive amounts of data at a reduced cost and with greater accuracy. Juniper Research estimates than the annual gross cost savings from the introduction of AI to KYC, for example, will exceed $700m by 2023. However, for an organisation to be in a position to take advantage of new and exciting technologies, there can often be a lot of groundwork to be done. Ensuring a business has the bandwidth to cope with change can be challenging. “There’s a lot of talk about automation and artificial intelligence, but in reality a

annual gross cost savings from the introduction of artificial intelligence to KYC are expected to exceed $700m by 2023

34 july/august 2019

large part of all this is still being done in Excel,” says Dan Hare, Founder of Continuum, a Jersey-based company that helps businesses turn their data into usable information. “Start-ups are arriving in droves, but it’s not always a case of ‘build it and they will come’. The pace of change at organisations can be incredibly slow.” It’s true that adopting regtech is a journey. But as new rules continue to proliferate – it is estimated that 300 million pages of regulation will be in existence by 2020 – it is a journey that must be taken. “Spending on technology to deliver compliance used to be considered a grudge purchase, but now it’s not just about compliance, it’s about proactively identifying where risks are coming from,” says Mills from Active Optimus. Indeed, for offshore financial centres such as Jersey and Guernsey, there is a significant opportunity to embrace regtech as a competitive advantage. “The Channel Islands must offer lower-cost, efficient financial services solutions,” says Le Page. “In the past, firms found competitive advantage from straight-through processing. Now, regtech can provide the next efficiency gains. And Jersey and Guernsey have the ecosystem to achieve that.” n

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Reaching the minds other publications can’t reach

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BUSINESS LIFE

Mental health

More and more employers are recognising their moral responsibility to look after staff as they face up to stark statistics about poor mental health in the workplace

CLIMBING THE AGENDA Mental health in the workplace has been climbing the corporate agenda, and firstaiders such as Hamon are in the front line of support that some enlightened employers are giving their staff. They have good reason for concern. The figures on mental health in financial services – a key Channel Islands sector – look distinctly unhealthy. Employers are recognising they have a commercial impetus – and a moral duty – to look after their staff and are taking steps to tackle it. A survey of more than 3,500 financial services professionals by the Chartered Institute for Securities & Investment, for example, identified off-the-scale workloads

36 July/August2019

and out-of-touch senior management as key causes of stress and mental ill health. Nearly a third of respondents said they would not be confident speaking to their manager about a mental health issue. Meanwhile, a 2017 survey for HR consultancy AdviserPlus reckoned a third of absences in the financial services sector were due to mental ill health. Another survey the same year, by the Chartered Institute of Personnel and Development (CIPD) and Guernsey Mind, found 44% of respondents had experienced mental health problems in the workplace on the island, compared with 31% in the UK.

Not getting away from your desk, not separating home and work, contributes to poor mental health. In financial services, there’s continuous stress and pressure

Richard Sheldon, a Partner at Appleby, led the research in his former voluntary role as Policy Adviser for CIPD Guernsey. He explains that the worrying gap between Guernsey and the UK could be attributed to the “obvious differential” between the island and the mainland – the majority of respondents work in financial services. With global clients, this makes for a high-pressure, always-on culture. “This inevitably leads to difficulties,” he says. “Not getting away from your desk, not separating home and work, contributes to poor mental health. In financial services, there’s continuous stress and pressure. It’s unremitting. There is a price to pay for putting your people in that environment.” Hamon raises the spectre of redundancy as another stress factor for financial services workers. “People are expected to work longer hours and some feel they have to stand out from their colleagues to show they work hard,” he says. “There is a lot of pressure on people. They have less time to look after themselves and less time to look after each other. People are so focused on getting the job done, and doing a good job, that they don’t always notice somebody next to them who may be struggling.” The CIPD/Guernsey Mind survey found that 17% of respondents who said they suffered from poor mental health solely blamed problems at work (7% for the UK), while 49% attributed it to a combination of personal and work problems (54% for the UK).

OWNING THE PROBLEM Employers are starting to take ownership of the problem. “This has become a topic of interest to most employers as they realise having happy and mentally healthy

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“I USED MY training a few times,” says Jason Hamon of his time as a mental health first-aider at wealth manager and employee benefits company Utmost Worldwide. He didn’t wear a hi-vis jacket or carry a box of medical kit, but the help he gave colleagues was as important as dressing any physical wound. “I might have seen somebody who didn’t quite look themselves and asked how they’re doing,” he says. It might sound simple, but Hamon, now Assistant Director, Risk and Financial Stability at the Guernsey Financial Services Commission, believes genuine concern and a 10-minute chat led to a couple of colleagues opening up about their struggle with family illness or bereavement. “They felt better because they were able to express how they felt and they knew somebody genuinely cared. In other cases, I was able to signpost people to an organisation or charity that might be able to support them,” he says.

Words: Emma De Vita

Mental health

Duty

of care july/august 2019 37

Mental health employees means better productivity,” explains Sally Rochester, a Director at Deloitte Guernsey, who also sits on the board of Mind on the island. “Definitely within our firm there is a desire for our staff to perform at a very high level because we want to deliver the best service to our clients,” she explains. “But there is also a very strong message now that you are responsible for managing that workload. And if it’s becoming too much, we expect you to say no.” It’s not just beneficial in terms of productivity for businesses to have mentally healthy staff, it’s also a good way to attract and retain them. “The reality is that in the Channel Islands there’s a very small talent pool and if you lose a good person because you’ve put them under undue pressure, it’s going to be hard to replace them,” says Sheldon. What’s more, if an employer earns a reputation as the sort of company that allows this to happen, then people will vote with their feet.

there is a strong message now that you are responsible for managing your workload. and if it’s becoming too much, we expect you to say no

SHIFTING ATTITUDES Stephen Pereira, a psychiatrist who treats City workers, believes that many corporates are becoming more proactive in talking about mental health. “Back in the late 1990s, people didn’t even have a properly defined mental health policy at work and there was very poor training in human resources or employee

How widespread is poor mental health among work colleagues? Guernsey: 44% UK: 31% The percentage of employees who have experienced mental health problems in the workplace

Guernsey: 49% UK: 54% The percentage of employees who attribute their poor mental health to a combination of personal and work problems

Guernsey: 17% UK: 7% Source: CIPD/Guernsey Mind, 2017

38 july/august 2019

The percentage of employees who have suffered from poor mental health who solely blame work problems

relations in this space,” Pereira told the Financial Times in May. Today, firms are keen to promote their mental health policies and encourage senior leaders to talk about their own problems. This shift is borne out by the formation in 2013 of the City Mental Health Alliance, a group of legal firms and financial companies that shares best practice on how to tackle mental ill health in the workplace. Deloitte’s Rochester points to a number of initiatives taken by her firm: training a quarter of its partners and directors to become mental health contact points; creating 12 mental health first-aiders; running campaigns where colleagues have spoken openly about their mental health issues; and giving employees the tools to manage their own stress levels, look after their own mental wellbeing, and spot the warning signs in themselves and others. Deloitte also offers staff an employee assistance service through which they can access free counselling sessions.

OPEN CULTURE It’s not just about making employers and staff more aware, says Rochester. “Having an open culture about mental health and wellbeing is the most important thing for me,” she says. “Everyone should be able to put up their hand and say: ‘This is all getting a bit too much. Here are the things I’m going to do and I would like you to support me in that.’” This might be something as simple as a mental health first-aider helping a colleague to put together a short-term plan to make

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Mental health

sure they leave on time or have lunch hours free to go to the gym. It can also mean making workload adjustments and supporting colleagues in speaking to their manager (or even on their behalf, if they so wish) about unmanageable levels of work. These discussions are always confidential and possible courses of action are always decided by the individual. At Jersey-based trust services firm Fairway Group, the mental health strategy for the company comprises two parts: education and support. First, line managers have been trained to recognise signs of poor mental health and to be aware of what support is on offer. Second, mental health first-aiders, trained by Mind Jersey, offer practical support and can recognise different types of poor mental health, from depression and anxiety to psychotic episodes. They are backed up by an employee assistance programme and private medical insurance that includes provision for professional help. “More generally with the education work we’ve done, we’ve started to create a culture that’s a bit more honest and open,” says Matt Ebbrell, Fairway Group’s HR Director. “People are realising that it’s okay to not be okay and it’s okay to talk about it. The more you educate people, the more you realise the issues that are out there and can then start to talk about them.” Creating the right workplace culture can be difficult, however. Having a culture of openness with no stigma around mental health issues, or to have workers feel confident to ask for help without fear of

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repercussion, is still some way off. “In most workplaces this is still a hard thing to do,” Rochester says. “We have come a long way in Deloitte, but we have a way to go.” Hamon says managers need to be more aware of what’s going on with their teams and better at recognising signs of mental ill health. And the prevailing culture of presenteeism needs to go. “Organisations need to put less emphasis on the amount of hours people work and more on what they are producing,” he declares. “Some people

People are realising that it’s okay to not be okay and it’s okay to talk about it. The more you educate people, the more you realise the issues that are out there

think that if they are being seen at their desk for 15 hours, then that’s a good thing. It’s a culture for some organisations that needs to be changed.” Ebbrell says he’s been in situations in previous organisations where people have been pushed beyond their limits. “It’s not good and it’s not right,” he says.

MANAGEMENT CHALLENGE Part of the solution is to educate people to be good managers and encourage their teams to work effectively and efficiently, and to be able to have challenging conversations when the time is right. Ebbrell also believes that mental health in the workplace needs to be discussed at all levels of an organisation, including at board level. “It’s about getting procedures in place that work together to support staff,” he says. “There’s no point in telling managers to be alert to this issue if you’re not going to talk to other staff about their mental health. Equally, there’s no point in training staff to spot the signs of mental ill health and not speaking to managers about it.” He continues: “For me, it’s about engaging the right decision-makers, but also having frameworks in place that complement each other.” It may sound idealistic, admits Ebbrell, but it’s not unachievable. The real challenge is in having “an open and inclusive environment where people don’t feel afraid of failure or admitting a shortcoming”. When it comes down to it, prevention is always better than cure. n

july/august 2019 39

Advertising feature

From Business Manager to Wealth Manager UBS Senior Client Advisor Robert Broughton takes a look at the challenges faced by business owners when a business sale takes place and they find themselves in the potentially enviable position of managing a significant financial windfall

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Advertising feature

THE SALE OF a business in many ways marks the transition from being a business manager to becoming a wealth manager. Even those who jump straight back into another entrepreneurial venture have to manage the implications of their new wealth. There are many different aspects that touch on issues related to the individual, their family and their business. Taking each element in turn, working with a variety of experts and tapping into broader networks can help owners avoid the main pitfalls. These may include a loss of oversight, a feeling of being overwhelmed, or in some cases even paralysis, where some owners have found themselves unable to sign the final contracts and transfer ownership. A healthy first step is simply to get the finances in order. It is also important to face this reality with family and to discuss the ramifications of a sudden increase in wealth. Questions such as “Do we tell the children or other friends or family?”, “What do we do with this money?” and “Are there tax-efficient options available?” are all important. Any new-found wealth needs to be effectively planned, invested and managed. Many new wealth stewards find themselves pursued by investment advisors, asset managers and even friends offering a range of investment options. Choice can itself be paralysing and it is important to consider how to handle these professional relationships and differentiate between various services. The focus on the financial side should be on the development of an individual financial plan that is designed to meet carefully considered goals and needs. This

we work with clients, providing access to our knowledge and extensive network of experts and former clients who have been there and done it already should eventually result in an investment plan that serves as an anchor for all longterm future investment decisions. Using a wealth manager should make the aforementioned planning a significantly simpler task. It can also mitigate against some of the pitfalls we have witnessed that can befall successful entrepreneurs. We use our experience and knowledge to help support entrepreneurs in investment decision-making once they retire as business owners and become managers of their wealth. The process of selling a successful business and managing the wealth that results from this sale should, in many ways, be a process of self-discovery, where an individual works through what is uniquely important for their business, themselves and their family. At UBS, we regularly work with clients in this situation, helping them to consider their long-term goals by providing access to our knowledge and extensive network of experts and former clients who have been there and done it already. n

FIND OUT MORE

If you would like more information on how UBS Wealth Management in Jersey can provide support, please contact: Robert Broughton, Senior Client Advisor UBS AG, Jersey Branch 1, IFC, St Helier, Jersey JE2 3BX Tel: 01534 701107 Email: robert.broughton@ubs.com

© UBS AG, Jersey Branch is authorised and regulated by the Jersey Financial Services Commission for the conduct of banking, funds and investment business. UBS AG, Jersey Branch is a branch of UBS AG (a public company limited by shares, incorporated in Switzerland whose registered offices are at Aeschenvorstadt 1, CH-4051, Basel and Bahnhofstrasse 45, CH-8001 Zurich) with its principal place of business at 1 IFC, St Helier, Jersey JE2 3BX. Terms and conditions are available upon request. © UBS 2019. All rights reserved. www.ubs.com/jersey

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july/august 2019 41

Cybercrime

How to handle a cyberattack Cybercrime is on the rise. Every business with a laptop and an internet connection is a possible target. prevention is clearly best, But what do you do if an attack succeeds? HAVE YOU BEEN whaled yet? If not, Words: Tim Green

then be thankful. A whale attack is one of the more insidious forms of cybercrime. It happens when a criminal sends a ‘phishing’ email directly to a C-level executive (a whale). The message will be friendly and personal. It will read as if it has come from someone senior. It might reference insider knowledge. But ultimately, it will ask for a money transfer, or some other sensitive transaction. And sometimes it works. Like when a Mattel executive received an email from her CEO asking her to wire $3m to a Chinese supplier. She did. But the email was fake. The $3m was sent to a criminal gang that had infiltrated the toymaker’s IT network. Whale attacks are a recent addition to the cyber criminal’s toolbox. But every year there are more: smishing, vishing, ratware, scareware, pretexting, tailgating. The list goes on.

COSTLY CONSEQUENCES This is why the number of victims keeps rising. In its Cyber Readiness Report 2019, insurer Hiscox said more than three out of

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five firms (61%) around the world had reported a cyberattack in the past year. The average cost of an attack to UK firms was $243,000, which typically comprises: • Direct financial loss – money taken from accounts or payments misdirected to criminals • Investigating and fixing a breach (in management time and direct costs paid to third-party experts) • Operational disruption – an attack can suspend day-to-day business • Legal and regulatory fines • Long-term reputational damage • Loss of competitive advantage. Companies can put measures in place to reduce the risk of an incident – starting with training. After all, three quarters of attacks succeed because of an easily preventable human error such as clicking on a phishing link. Another essential is to keep systems secure. The easiest way to do this is to adopt a cyber risk industry standard such as Cyber Essentials, run by the UK National Cyber Security Centre (NCSC), or ISO 27001.

PLANNING IS EVERYTHING But nothing is guaranteed. So how should you respond if there has been a breach? The single most important advice is: prepare. Evidence suggests many Channel Islands companies don’t. A 2017 survey by the Jersey Financial Services Commission (JFSC) found that 32% of financial services companies had no cyber incident response plan in place. Denis Philippe, Head of ICT at the JFSC, says this is a mistake. “Planning is

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Cybercrime

HELP FOR FREE Happily, there is plenty of free help available. A popular choice is Exercise in a Box, an online tool developed by the NCSC. Companies register for an account, and the NCSC sends back a tailored report, which details the most relevant guidance. A robust cyber plan like this will help victims to avoid panic, which can be another costly mistake. “There’s this misconception that you should immediately pull the plug,” says Philippe. “This is wrong. Attackers might still be active on your network, and this will alert them. They shouldn’t know what you know. So you should not rush into any decisions. You need to establish what has actually happened before you do anything.” Another misstep is to use corporate channels to discuss the incident. “This is another way to tip off your attackers,” says Philippe. “You should use out-of-band communication channels – even pen and paper – to talk to colleagues until you have isolated the threat.” Companies should be similarly careful about how to communicate with customers, suppliers and other stakeholders. On the one hand, it’s important not to spread alarm. On the other, there is the need to stay in control of the message (see Expert View, overleaf). While it makes sense to control the

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Companies should get all stakeholders in a room and run through an incident response procedure

message, there can be a legal time limit on how long companies can stay silent. The EU’s General Data Protection Regulation (and similarly Jersey’s Data Protection Law 2018) compels organisations to report data breaches to regulators and affected stakeholders within 72 hours of discovering them.

CONTAIN THE THREAT Once the cause of the attack is established, the next step is to contain the threat, as Cheri McGuire, Chief Information Security Officer at Standard Chartered, explains. “If the incident was captured via monitoring systems, you should isolate the system to prevent further infections. Then you can launch a forensics investigation to determine

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everything,” he says. “Companies should get all stakeholders in a room and run through an incident response procedure. They should use playbooks to cover different scenarios – after all, you can prepare for an email attack, but what if the website goes down? It’s important to anticipate these events and see how people react.” He also stresses that it’s vital to consider the type of cyberattack. Firms should approach and deal with each incident on a case by case basis. Specialist organisations such as PwC offer professional services to help larger companies rehearse what to do after an incident. Indeed, PwC even offers an iPad role-playing exercise – Game of Threats – that simulates the experience of a cyberattack. But what about smaller companies that don’t have the resources to buy in expertise?

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Cybercrime

When hackers attack:

top tips for how to respond

Use out-of-band communication channels – even pen and paper – to talk to colleagues until you have isolated the threat

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● I mplement a cyber security standard such as Cyber Essentials or ISO 27001. ●P repare a breach response plan – consult an expert security firm or use a free resource such as Exercise in a Box (from the UK National Cyber Security Centre). ●A rrange regular exercises to test the response plan. ●O n the day of an attack, don’t panic. Resist the temptation to switch off the network before you know the facts – this could alert attackers. ●D on’t use corporate channels to communicate until the threat is over – your attacker might be monitoring them. ●O nce you have identified the threat, contain the virus or malicious software.

the cause and clean the system,” she says. However, in a small number of cases, the threat will remain live – and attackers might demand a ransom to restore the system. Should companies pay up? Experts advise against it. Often, a payment encourages criminals to repeat the attack again a few months later. “Never pay demands to release assets which are rightfully yours,” says Stephanie Fox, Head of IT at trust services company Fairway Group. “If you are targeted by blackmail attempts, you should inform the IT department. They will have back-up and recovery plans designed to recover the business in events of this nature.” Another strong reason not to pay a ransom is that it can be illegal. In some scenarios, the UK CounterTerrorism and Border Security Act views ransom payments as a mechanism for funding terrorism. Insurers can provide good advice here. They might even pay for

● Take control of the message. Communicate with suppliers and customers as soon as possible. Be reassuring, but do not divulge sensitive details. ● Inform customers and regulators within 72 hours if private information has been breached. ● Talk to law enforcement if necessary. ● Notify your insurer. ● Do not pay a ransom – it usually encourages further attacks, and it might be illegal.

the costs of professional negotiators and provide legal advice to ensure that any payments are lawful. Lee Refault, Director of Jersey-based Rossborough Insurance, says: “We can help assess whether the demand is legitimate. If it is, then we advise cleansing or restoring from clean back-ups without paying a ransom. A cyber policy will pay the firstparty costs to do this.” However, even an insurance policy can’t help to recover the cost of reputational damage, which the NCSC highlights as one of the consequences of a cyberattack, alongside financial loss and data breaches. The reputational damage for Mattel could have been severe, had the $3m whaling attack it suffered actually succeeded. Luckily, it took place during a Chinese public holiday and authorities were able to intercept the payment before it landed in the perpetrators’ bank account. Luck, however, may not always be on your side, which is why it pays to be well prepared at all times. n The JFSC does not endorse or promote the commercial products or services by any company or regulated firm in this article.

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Cybercrime

EXPERT VIEW How to communicate in the aftermath of a cyberattack Nichole Culverwell, Director, Black Vanilla No cyber defence can be 100% effective, so developing the ability to communicate with customers and stakeholders is critical. Of course, no two situations are the same, but there are some best practice points for good crisis communications: 1. Communicating quickly and openly reduces speculation and helps to position the organisation as being in control of the situation. 2. Expressing concern for those affected demonstrates good corporate behaviour, and how your organisation behaves during a crisis can make or break your reputation. 3. Speed is important; it’s likely you will need to start communicating before you know all the facts. Start by explaining what you know and the steps you are taking, express concern for those affected and be clear about when you will next issue an update. 4. Senior figures, such as the CEO, speaking honestly about what the organisation has learnt and the actions it will take help to move press coverage onto the repair and rebuild phase. Make sure media training is part of your crisis plans. 5. Organisations that have an active online and social media presence are able to use those communications channels to their advantage. Most importantly, ‘no comment’ is not an option. Those who do not engage proactively with the media will create an information vacuum that will be filled with conjecture and rumours. Good communications are fundamental to what should be a key aim in a firm’s cyber risk strategy – maintaining business continuity. This requires planning, training and testing. So, alongside the other key elements of cyber response, it is critical to include communications planning to help protect the organisation’s reputation. Adam Riddell, Director, Crystal PR Having a plan in place is the most important thing in mitigating a cyber incident – and ensuring that communication is part of that plan is critical. The top information CEOs want to know after a crisis relates to brand reputation, according to a new study from PR News and Crisp. With communications being the brand guardians, it stands to reason that what you say during a crisis really matters in the long term – in many ways, how a firm handles a crisis can have more of an impact than the incident itself. Reputational damage stretches far beyond, for example, regulator fines. Research from data breach specialist Centrify found that the average impact of a data breach is usually a 5%

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drop in share price and 7% loss to customer base. Having an integrated crisis team means that a firm can address its legal obligations and technical issues whilst also keeping stakeholders – their staff, customers, regulators and suppliers – informed quickly and in a joined-up way, while at the same time avoiding knee-jerk reactions. Minutes count, so being proactive, moving at speed and knowing the facts are all really important. It’s also worth thinking about any technical issues specifically associated with a cyberattack. Will all your usual communications tools be available in the aftermath of an incident? In 2017, law firm DLA Piper ended up running its communications response to a cyberattack through WhatsApp – it’s a fascinating case study. Interestingly, recent research found that 41% of UK firms don’t have an up-to-date crisis communications plan in place. That’s an improvement on previous years, but there is clearly still some way to go. Harriet Black, Account Director, Orchard PR Effective planning is extremely important for dealing with any crisis situation. Gather your crisis communication team regularly to put your plan to the test. Practise your key messages, draft template media responses and agree how you will respond to difficult enquiries. Being proactive is vital. Getting the correct information into the public realm will increase the chances of accurate reporting. You need to act and communicate quickly to avoid an information vacuum and someone else filling the void. You might not be able to use digital channels to communicate with key stakeholders if they are compromised. This means you’ll need to think about traditional communication channels, such as providing the media with statements over the phone or organising face-toface briefings to update staff. Be prepared. Above all, your response to the crisis should be truthful. Cyberattacks are becoming more commonplace and what sets apart successful businesses is how they react, including clear and honest communication. There are several things you can do to smooth the way for your response. Make sure you have a hard copy of your crisis communications plan to which you can refer if your corporate IT systems are down. What’s on your IT systems that you might need in the event of a cyberattack – for example, the contact details of your corporate spokespeople, the Office of the Data Protection Authority, industry regulators and other stakeholders, including the media? You’ll also need a copy of the passwords for your corporate social media channels so you can log in and update them via a personal device, if required.

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Advertising feature

Meet jt’s cybersecurity experts the team protecting our shores

Left to right: David Salisbury, John Bridge and Marcel Le Claire

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Advertising feature

MEET MARCEL “I’ve worked in IT since 1981, primarily within large public sector organisations. I first became interested in information security in 2006 and qualified as a Certified Information Security Manager (CISM) by 2009. My main area of expertise is in governance, risk and compliance. I like nothing more than analysing and improving business strategies.”

MEET DAVID “I have spent more than 35 years working in IT. I started out as an electronics engineer, working on the second IBM XT PC in the UK, still with an American plug on it. Back then, my work was mostly with banks and governments on their security needs, before ‘cyber’ became a thing. Even though the landscape has changed drastically, I still enjoy working with customers to understand the risk and finding the simplest way to mitigate it.”

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MEET JOHN “My career in IT began over 25 years ago, with the past 10 years being dominated by cybersecurity. I hold various accreditations, including Certified Ethical Hacker, Certified Forensic Investigator and Cisco Cyber Security Specialist, and I’m soon to complete an MsC in cybersecurity. My specialism is very much focused around the offensive (attack) side of security and understanding the hacking side. This gives us and our customers an added advantage when working in an advisory role in helping businesses to secure themselves.” Q: What do you think are the biggest risks to businesses and individuals here in the Channel Islands? Marcel: It’s simple: people. Businesses can implement the best security platforms available but, without any employee training, they are opening the channels unintentionally from the inside, perhaps via a phishing link or through an unknown USB. Harmless actions can trigger off hidden processes on a network that will bypass most of the security and can cause huge problems to the business. Now, with GDPR in place, these actions can result in a data breach, leading to the possibility of fines – though often it’s the reputational damage that is far costlier. David: Because we have such low crime rates in the Channel Islands, we feel safe, But hackers can be located anywhere in the world – and us feeling insignificant on a global scale is becoming our weakness. What many don’t realise is that there are highly organised businesses across the world hacking on an industrial scale and that for a hacker in China or Eastern Europe, getting hold of your eBay or Facebook account is worth a year’s salary. Q: How can I more effectively manage my multitude of passwords? Marcel: You’ve heard it all before, but don’t use the same password for every site

and don’t ever write them down or add them to a notepad on your phone. Use a reliable password manager – such as Norton Password Manager or LastPass – to store passwords and use autocomplete for web forms. Focus on making your single password for your password manager very difficult for someone to guess, but easy for you to remember using a variety of capitals and characters. Q: We hear a lot about patching but is it that important? David: A patch is a set of changes to a computer or application programme, designed to fix, update or improve its use and security. Patches are categorised by their urgency. Some patches and feature packs contain only enhancements and new features, but the critical and security patches are correcting issues that have been discovered that could make you vulnerable. A 2015 Verizon report found that 70% of attacks exploited known vulnerabilities that had patches already available but hadn’t been updated. So yes, it is important – and if you get an update notification, make sure you do it. Q: Are ‘open’ public Wi-Fi networks safe? John: We’ve all been there… You’re travelling and in a public area (hotel, airport, etc) and need to check your emails, WhatsApp or Facebook. You search for a Wi-Fi network and there’s one that doesn’t need a password, so you connect to it. The problem is that this connection is not encrypted and, worse still, it may not

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WE ARE VERY LUCKY to live and work in idyllic surroundings in the Channel Islands, but as more and more cybersecurity issues threaten our shores, we can never be 100% safe from the world of cybercrime. With their eyes firmly focused on helping Channel Islands businesses reduce the risk of cyberattacks or data breaches, JT’s security experts bring their wealth of experience to bear by staying one step ahead of the hackers and ‘phishers’. Our team helps ensure our customers have both good governance and a risk management strategy is in place. Here, we meet the JT team at the forefront of cybersecurity and ask them to answer the questions most frequently asked by large-scale organisations and their own friends and family. The advice is often very similar: think about your vulnerability; review your security, be it personal or corporate; and, where you need to, take expert advice.

Advertising feature actually be a genuine wireless access point but a hacker pretending to be one. If the latter is the case, they can forward on the connections to the internet so that you think it’s genuine but they can capture everything (user names, passwords, bank or credit card details) before forwarding on the information. We call this a man-inthe-middle attack. Our advice would be to download and install a VPN client, which will encrypt your connection between your device and any other VPN termination point. This will hide the traffic to anything or anyone in between. Q: What’s the biggest risk to personal data? Marcel: Again, human error. In Guernsey alone, 40 personal data breaches were reported to the Office of the Data Protection Authority (ODPA) in the two months up to 22 April 2019, with almost all (35) occurring due to human error. Encourage all employees to send documents as links rather than attaching to emails. This will prevent an attachment with an email sent incorrectly to an external recipient from being opened. Think about disabling autocomplete in your email system, so you always have to explicitly type in the whole email address. A large proportion of incidents happen due to incorrect disclosure being sent in error by email or posted to the wrong person. Investing in training for your team regardless of size, roles or industry will save you time and money and protect your reputation in the long run. John, you’re a qualified Ethical Hacker – but what’s ethical about hacking? John: To really be able to secure a business,

To really be able to secure a business, you need to understand how hackers think and work

you need to understand how hackers think and work. It is a very fast-moving world with new attacks being released daily. Understanding how others think and work helps us as a business stay ahead of the curve, offer products, services and advice that will help to educate our customers and islanders about the next wave of cybertrends hitting our shores, and provide products to support them against this. Q: What one piece of advice would you give to islanders/individuals to help protect them? David: Turn on the free two-factor authentication on all your email accounts. I have seen so many friends and businesses have their complete digital life taken over by hackers getting into their email and then resetting the passwords on other accounts

to spread their control. It can take weeks to get your digital life back and stop those dubious links being sent to your network from your account. Marcel: Be aware of your data privacy and what you yourself can do. We each have a digital profile containing sensitive data such as our shopping history, likes, current location and web browsing history. Some of these profiles have over 3,000 data points about a single individual. Be wary about giving up these details – next time you are asked to give away an extra bit of personal information to get a bigger discount on a purchase, think twice about the lasting digital footprint you are creating. John: For business owners, large or small, invest your time, not just your money, in security. Over the years, I have seen hundreds of thousands of pounds of technology bought to make a company ‘secure’ and then left on the shelf or not configured properly because it’s ‘difficult’. A simple strategic review of how best to use existing solutions, controls or processes, along with team training and education, can remove risks and often save money, and be easier to implement whilst keeping your business and teams secure. David, Marcel and John are just three people in JT’s rapidly growing specialist team, who are ready to help our customers and support their businesses with the right products to protect them today and in future. Our work with them makes their job easier. It’s a partnership; we help you understand your risks, identify vulnerabilities and provide solutions. Our team will help you establish and maintain an effective response to cyber issues. n

FIND OUT MORE

For more information, go to www.jtglobal.com/security or contact the team to have a free cyber score card analysis of your business. Tel: 01534 882345 Email: business.solutions@jtglobal.com www.jtglobal.com @jt_business JT Group Limited

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Globalisation

Breaking at the seams? Populism and protectionism are putting a strain on global flows of trade and investment capital. As a key conduit to these flows, are international financial centres under threat from declining globalisation?

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Globalisation

Words: Alexander Garrett

THE HEADLINES HAVE been stark: ‘Globalisation in retreat’, ‘Will globalisation go into reverse?’ and ‘Globalisation: the rise and fall of an idea that swept the world’. Since 2016, with Brexit heralding what some see as the break-up of the European Union (EU) and US President Donald Trump fighting a protectionist battle on several fronts in support of ‘America First’, the idea of an interconnected and steadily integrating world economy has appeared to be in question as never before. And that poses significant questions for international financial centres (IFCs) such as Jersey and Guernsey. Globalisation is not just about trade – it’s also about the global movement of capital flowing in and out of countries to oil the wheels of commerce. IFCs play a key role in that process, providing much of the finance that enables individuals and companies in one jurisdiction to invest in assets in another. The demise of globalisation, then, would potentially be a serious blow for the Channel Islands. Or would it?

FALL IN GLOBAL FOREIGN DIRECT INVESTMENT IN 2018 SOURCE: OECD

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First of all, it’s worth acknowledging that the term ‘globalisation’ is bandied around using a broad range of definitions. For some, it’s about the transfer of economic power from sovereign governments to trans-national players, including global corporations; for others, it means the free movement of goods, capital and ideas around the world; and for others still, it’s about integration – a worldwide movement towards a common economic, financial, trade and communications system. The same can be said about the origins of globalisation. Some credit Scottish political economist Adam Smith with first espousing the theory in his The Wealth of Nations; others point to Harvard Business School professor Theodore Levitt, who coined the term in the 1980s. Either way, globalisation has become the ubiquitous buzzword of the millennial era, held responsible for many of society’s goods or ills, depending on who you talk to. Geoff Cook, a former CEO of Jersey Finance and Head of Wealth Management for HSBC, and now a Consultant for Mourant and Quilter Cheviot, points out that while many of the headlines about globalisation refer to trade, for IFCs it relates entirely to investment capital. “IFCs enable the deployment of capital in a more efficient manner that allows the pooling of investment more easily, with less cost and less friction,” he explains. “We are a kind of warehouse for capital and we take footloose capital that isn’t currently working hard, we package it in the right kind of container, and then we carry it to a market and put it to work.” As Joe Moynihan, Cook’s successor as CEO at Jersey Finance, recently put it: “We are making it easier for investors around the world to pool their assets and put them to work; bringing about tangible change through infrastructure development in developing countries; facilitating investment in renewable energies; allowing companies large and small to trade and grow internationally; creating jobs around the world; and helping people in all corners of the globe to realise their ambitions.” Pooled, tax-neutral investment products provide the perfect vehicle to aggregate finance from different parts of the world and put it to use where it can be most

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BROAD DEFINITION

Globalisation

IFC s are a kind of warehouse for capital – we take footloose capital that isn’t working hard, we package it in the right kind of container, and then we carry it to a market and put it to work profitable – generating jobs and prosperity in the target market at the same time. Investment overseas by governments, companies and individuals can be driven by a number of factors – the need to diversify, the ability to generate foreign currency earnings and to relieve inflationary pressures at home, to name but three.

IN RETREAT? So what’s the evidence that globalisation is in retreat? In the broader trade context, the US’s protectionism, imposing tariffs on China and pulling out of important trade agreements, shows which way the wind is blowing for the world’s biggest economy. In a more specific financial context, the main evidence is the decline in foreign direct investment (FDI) in recent years. Figures from the Organisation for Economic Cooperation and Development, for example, show that FDI dropped 27% to just over $1trn in 2018 – the third consecutive year of decline – bringing FDI down to its lowest proportion of global GDP since 1999. Cross-border bank loans have also declined enormously since they peaked just before the global financial crisis in 2008, and any growth has been anaemic in the past three years. “Cross-border capital flows are back to their level of the late 1990s,” says the International Monetary Fund.

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There is, of course, a huge distorting factor in the FDI figures – the repatriation of billions of dollars of overseas earnings by large corporations such as Amazon, Apple and Google to the US in the wake of President Trump’s tax reforms. Nevertheless, if one-off factors are stripped out, FDI growth over the past decade still only averaged 1% per year, compared with 8% between 2000 and 2007, and more than 20% before 2000, according to the United Nations Conference on Trade and Development (UNCTAD). The organisation’s Investment and Enterprise Director, James Zhan, said: “The stagnating trend of the decade is ascribed to a range of factors that include declining rates of return on FDI, the increasingly asset-light forms of investment and a generally less favourable investment policy climate.” In political terms, globalisation has been under attack as never before, with the widespread perception that it has provided an opportunity for large corporations to pay as little tax as possible and an incentive for individual countries to compete with each other in a ‘race to the bottom’ to lower their corporate tax rates. Champions of globalisation, on the other hand, point to its role in lifting hundreds of millions of people out of poverty, while FDI has been instrumental in helping developing countries to become increasingly powerful emerging economies.

INCREASED WARINESS Whether declining economic indicators and public suspicion add up to a reversal of globalisation is a moot point. There is a school of thought that globalisation is simply inevitable. As former UN Secretary General Kofi Annan once put it: “Globalisation is an irreversible process, not an option.” Cook is less sanguine: “I think it is in danger of stalling.” As well as the geopolitical forces that have weakened the amount of money crossing borders, he points to the increased wariness of the US and Europe to give China access to their intellectual capital.

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Globalisation

“The big-ticket high-profile acquisitions have slowed significantly as Europe and America start to get edgy about IP,” says Cook. American attempts to constrain Huawei’s involvement in developing 5G also suggest a cooling off in the global exchange of technology. So what does this mean for IFCs? Two years ago, corporate services firm Vistra, which has offices in Jersey and Guernsey, surveyed almost 600 corporate services executives and found that “71% consider globalisation to be at least somewhat under threat”. Jonathon Clifton, Group Managing Director of Vistra’s company formation division, said: “For globalisation to be under threat inevitably unsettles the trust and corporate services industry, an industry that hinges on cross-border transactions and international supply chains, as well as free trade and investment.” However, there seems to be little sign of any adverse effect so far in the Channel Islands. Jersey Finance has recently reported a record number of people working in the finance industry – just under 14,000 – with business confidence in the finance sector “strongly positive” at +39%. And figures released by the Guernsey Financial Services Commission earlier this year showed that the value of private equity business in Guernsey reached its highest-ever level at the end of September 2018, passing the £120bn mark for the first time.

RISK MITIGANTS Geoff Cook believes any slowdown in global investment does pose a risk to the Channel Islands, but that two factors mitigate that risk. “First, I think trade will regionalise, rather than resort to being nationally focused. So I think the Channel Islands will still prosper with that, because we are one of the big channels of investment into Europe and within Europe; we raise capital from pension funds and endowments and high-net-worth individuals and then invest that into infrastructure and private assets throughout Europe and further afield.” The second mitigant, says Cook, is a “flight to quality”. The EU recently reviewed the tax systems of 92 countries with a view to achieving a level tax playing field. Jersey and Guernsey were given a clean bill of health and deemed “co-operative jurisdictions”. Both have been at the forefront of adapting to keep up with international standards and regulation, says Cook, at a time when others have struggled. “We’re getting a commercial dividend for being strong on governance and early adopters of international regulation.” His conclusion: the pie may eventually be smaller as the result of the reining back of globalisation, but the Channel Islands will enjoy a bigger slice. Brexit is a specific area of concern for the financial sector worldwide, but with more than 50% of capital flows to the Channel Islands coming from outside Europe, let alone the UK, it is far less of a threat than some people believe. Looking ahead, few would write off globalisation, even if it looks less certain that it will be quite the dominant trend that it has been for the past few decades. However the future shapes up – whether Trump’s trade wars prove a temporary setback or the world adopts a more regional-centric economic outlook – few would bet against IFCs finding their own part to play and continuing to prosper. n

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AVERAGE RATES OF FDI GROWTH ARE FALLING

PRE-2000

2000–2007

2009–2019

SOURCE: UNCTAD

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Employee benefits

Safer

Jersey and Guernsey have stepped up efforts to regulate their employee benefits sectors. as a result, Both islands are seeing lively interest for their offerings Words: Richard Willsher

SAVING FOR THE future is one of the most valuable things an employer can help its employees to do. For most, that comes in the form of a workplace pension. When your employees are based in one jurisdiction, and with you for the long haul, setting up and administering an occupational pension scheme according to the laws of the land is a fairly easy task. But what happens if you’re a large multinational with a cohort of highly globally mobile employees who may only stay with you for a few years before moving on to their next employer? Whose pension laws do you adhere to? And does it even make sense to make such a long-term commitment to an employee who may have moved on in two to three years? From the employee’s perspective, having to wait until retirement to access the savings pot may not be a particularly attractive benefit. To address such concerns, multinationals have traditionally turned to international finance centres to help set up vehicles such as non-charitable purpose trusts or employee benefit trusts, which enable them to provide some form of savings for their employees without having to commit to long-term pension investments. The problem with this, says Julia-Anne Dix, an Associate at Mourant Ozannes, is that such arrangements are often not government approved, affording employers and employees little protection.

JERSEY’S ISP S In January of this year, Jersey introduced a solution – International Savings Plans (ISPs). While pensions can only be accessed at a pre-agreed retirement age and there are restrictions on the level of contributions that can be made, ISPs have no such funding limits. In addition, money can be drawn down for life events when it’s most

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needed, such as buying a house or paying to put children through university. Beyond this savings element, ISPs, which are only available to those employed outside Jersey, can also be structured to incorporate a pension and share scheme. Importantly, the plans, which must be established as irrevocable trusts and have a regulated trustee, are approved by the Comptroller of Taxes, and any income or gains accruing from the plans are tax-free. “You can now place your funds in a well-regulated jurisdiction, the government is aware of the product and you have asset protection,” Dix explains. This statutory status gives employers and employees added peace of mind. Although ISPs appeal to large multinationals with a globally mobile workforce, one of the product’s main target groups are employers in the Gulf Cooperation Council countries of the Middle East, which are subject to a mandatory requirement to provide end-ofservice benefits to their employees when they leave employment. However, as Nancy Chien, a Partner at Jersey law firm Bedell Cristin, points out, they don’t need to physically put the money aside in order to meet the liability. “The risk for the employee is that when they leave, he or she will have no recourse against the employer,” Chien explains. “This is how ISPs can help. Employers will actually physically put money aside, which will be properly managed and invested, so that when end-of-service benefits are due for payment, they can use the funds to meet those payments.”

GUERNSEY’S OFFERING Guernsey’s savings regime offers employers similar options, although the labels are different – end-of-service benefits are provided via ‘gratuity schemes’, for example – as is the approach to regulation.

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about the industry (Jersey doesn’t have pensions regulation or a pensions regulator, although it is currently debating whether to give such a responsibility to the Jersey Financial Service Commission or to create an entirely new body). According to Calnan, the 2017 changes in Guernsey have attracted more employers to the island, with its pensions and savings industry increasing by £0.5bn between 2017 and 2018. In 2019, Guernsey’s income tax law was amended to exempt gratuity schemes from paying tax, making the jurisdiction even more attractive for such business.

MIDDLE EAST INTEREST Both islands are seeing a lively interest from the Middle East for their respective versions of ISPs. Providers have targeted the region, speaking at conferences and liaising with multinational and local businesses with mobile employees. Indeed, there are some jurisdictions in the region that have experienced difficulty in attracting talent and so a good package of employee benefits, including long-term provision of pensions and ISPs, can be an aid to recruitment. Lisa Barnett, Managing Director of RBC Guernsey, says that her firm has been

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While Jersey regulates the scheme, Guernsey regulates the professionals who set up, run and advise on pensions and gratuity schemes, explains Angela Calnan, Group Partner at Collas Crill in Guernsey. Since amending its Regulation of Fiduciaries Law in 2017, such activities can only be undertaken by licensed trustees, who must regularly report to the Guernsey Financial Services Commission (GFSC) on any schemes they administer. The changes in the law have given the GFSC supervisory jurisdiction over the schemes and, for the first time, it has enabled the regulator to collate statistics

Employee benefits

involved in this business for about 20 years. She adds that, alongside the Middle East, RBC Guernsey is also getting a lot of interest out of the US, Hong Kong, Singapore and the UK. Guernsey’s and Jersey’s ISPs bring multinationals and their employees long expertise in managing pensions, which, apart from the differences in triggers, essentially require the same investment management skills. Also, as Peter Culnane, Head of Pensions at independent fiduciary group Fairway, explains, they can “plug in to a jurisdiction that ticks just about every box from a regulatory, security, accountability and reputation perspective. “You’ve got the infrastructure as well... and from a board perspective, wherever a company is based, they can actually manage the provision of all of their staff wherever they are in the world.” An important point to note is that ISPs are not a tax-structuring vehicle. Chien points out: “An ISP is in no way an arrangement which is used to mitigate, avoid or circumvent any tax payments or tax reporting obligations. That is absolutely critical. It’s not a tax-driven product at all. It’s a product that’s driven purely by market demand, without any tax element. “So, if there’s a reporting obligation under FATCA [tax legislation in the US] or the Common Reporting Standard, then the employers and the employees have to satisfy those.”

DRAWDOWN TRIGGERS Both the Guernsey and Jersey ISPs allow for scheme members to take their benefits before retirement age, so what is a valid trigger for drawing funds? “A very common US requirement is a hardship withdrawal,” Barnett explains. “So, if a member specifically needs that money, as long as the employer consents, they can take out their money on the grounds of

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an isp is not a tax-driven product at all. It’s a product that’s driven purely by market demand, without any tax element

Springate, who leads the Technical Team at Jersey Finance. “They want a saving scheme that offers flexible rules as to when benefits can be paid out. They want access to their savings on termination of employment or when and if a life-changing event occurs. “Life-changing events in the modern world include divorce, children going to university, children getting on the property ladder and hardship events that could see them lose their home or livelihood. “The flexible nature of these schemes means that employers can decide what they want to offer employees – for example, a hybrid scheme so that some of the savings are a traditional pension and the rest is part of a savings plan.” RBC Guernsey’s Barnett concurs, adding that the boundaries of International Pension Plans and ISPs are now blurring. The demise of defined benefit pensions is one reason for this. “I’d say 95% of our new business isn’t a true pension plan. It’s an end-of-service gratuity plan,” she says.

EARLY DAYS

hardship. This could be redundancy or ill health, but looking into the future, it could be for life events – to buy property or fund a wedding, for example. I think it’ll be more life events; that’s how we see it going forward. It’ll be a lot more flexible, in terms of being a savings vehicle provided by the corporates, with moral values behind what they offer to their employees.” What about the integrity of drawdown triggers? Could an ISP member simply like the idea of buying an expensive car or jewellery, say, and call upon the plan trustee to release funds? Katherine Neal, Counsel in Jersey for law firm Ogier, says there are rules to guard against such risks. “The funds are held in a discretionary trust,” she says, “so any payments out will be subject to the discretion of the trustees. At the point that they formed the trust, employers will have set out what the triggers and guidelines are. If there are no triggers and guidelines, it will be trustees’ responsibility to decide what qualifies. So, you rely on the general discretionary principles of the trust and the trustees’ obligation to act in its best interest.”

MAIN ATTRACTION This, however, typically does not work against the underlying main attraction of ISPs: their flexibility. “Employees are now more likely to work for a number of employers in their working lives,” says Lisa

Although Jersey’s ISPs have been available for six months now, Nick Marshall, Senior Associate at Collas Crill in Jersey, says it’s still early days for the product. “I think everybody is still finding their way to see how best it can be used for employees,” he explains. “I’ve been having discussions with a number of local trust businesses, and with a particular clearing bank, to decide exactly how it would operate in practice.” One key consideration is how to invest the underlying fund to be able to make more regular drawdowns than a pension scheme. The frequency and degree of drawdowns will depend on who the employer wants to set the scheme up for – a small number of high-net-worth senior executives or a larger number of employees at different levels of the organisation, for example. The costs of running the scheme also need to be factored in. Marshall adds: “Because ISPs are so flexible, it’s important that the rules are drafted very specifically and carefully for each employer at the time that they want to set one up, and the expertise we have on the island is paramount for that.” In the wider context of the changes in working practices, ISPs may very well be in the sweet spot. The days of jobs for life are long past. Fixed-term contracts, jobs in the gig economy, increased global mobility and the war for talent all dictate that remuneration is more closely tailored to employees’ career journeys. With the provision of flexible structures that can be shaped to meet the interests of both employees and employers, and with funds professionally managed in wellregulated jurisdictions, the Channel Islands look well placed to attract a lot of ISP business in the coming years. n

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BUSINESS LIFE

LAUNCHING in 2020

REGISTER INTEREST FOR EDITORIAL QUERIES, CONTACT eila.madden@blglobal.co.uk FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK

Digital wills

How to pass on your digital assets When writing a will that determines who gets the house and the good china, take a moment to consider what happens to our online possessions too after the final curtain Words: Jessica Furseth WHEN LONDON RESIDENT Matt Thompson committed suicide in July 2015, he left 4,500 family photos and 900 videos on his Apple iPhone. When his widow, Rachel, asked Apple for access to these photos and videos to help their young daughter, Matilda, remember her father, the tech giant refused, stating that Matt had not left any instructions about what should happen to his account in the event of his death. After a three-year legal battle, in May of this year a judge finally ordered Apple to give Rachel access to her husband’s account. She was only able to take Apple to court because the lawyers fighting her case agreed to work for no fee. Accessing the ‘digital assets’ of loved ones who die without leaving instructions about what do with them is becoming an

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Digital wills

EMERGING LAW A tangible asset can be passed down in a will under the law, regardless of whether it has value. People assume the same will be true for digital assets, but it’s not. “This is an emerging area of law,” says Gary Rycroft, Partner at Joseph A Jones & Co in Lancaster and Chair of the digital assets working group at the Law Society. Commenting on the Thompson case, he says: “The point Apple is making is that they’re [holding] data for someone who they have a contractual arrangement with. They don’t want to breach that contract without having either express permission of the person, or a court order.” Rycroft doesn’t think we’ll all end up in court over this, as long as we catch on to the fact that we need to leave instructions. “Making a will is key,” he says. “Make it clear what you want, and then Apple or whoever will know that they have your blessing to pass on your digital assets to [your nominated person].”

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Several digital services now have procedures to formalise this process: Google’s Inactive Account Manager and Facebook’s Legacy Settings page both allow you to nominate a trusted contact to handle the account should you pass away. But the nature of ownership is changing. While one photo storage service will let users rent storage space and retain ownership, others will not. Anything you upload to Facebook becomes theirs, for example. And anything that you buy on iTunes isn’t actually yours; it’s just something you have the right to access – and that right dies with you. Donna Withers, Head of Probate and Wills at Bedell Cristin in Jersey, says that the matter of digital assets is so new that clients who come to see her don’t often have a good grasp of it. “It’s something that we bring up with people whenever they’re making their ordinary wills. We will ask them what [online] accounts they have,” says Withers. Like most modern day will and probate lawyers, Withers finds herself having to tell people about what is and isn’t possible to cover in a standard will. The fate of people’s digital assets will come down to the terms and conditions of the service in question, and it can vary widely: air miles or flight status will vanish when the user dies, for example. Instagram will memorialise or close down an account on receipt of a death certificate, while the only option Twitter offers is to delete an account. With Bitcoin, there’s only one password and if that’s lost, the money is too – that’s what happened earlier this year when $190m in cryptocurrency was permanently lost following the death of the person who held the key. A simple solution to all this is to write down all your online accounts and passwords, alongside instructions for what you want to happen to them when you die. “But that goes against digital advice that you should never write down your password. Not to mention that you could be in breach of the terms of your contract,”

the nature of ownership is changing. While one photo storage service will let users rent storage space and retain ownership, others will not

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increasing problem. When we say ‘digital assets’, we’re not talking about things like online bank accounts; those funds can be inherited like any other financial assets. We’re talking about a library of digital photos that reside behind a computer password, sitting in a data centre owned by Google or Microsoft. A music collection worth thousands of pounds on Apple’s iTunes. A library of books on an Amazon Kindle, a gambling account, a Bitcoin wallet, frequent flier miles, a personal website, an Instagram account that makes money from advertising, or a Facebook account that’s just for friends and family. Only 13% of us have made plans for our social media accounts after death, according to the Digital Legacy Association, and only 23% have made plans for our purchased digital assets. But the technology companies that often hold our digital assets won’t just pass on the data to a spouse or parent without clear instruction – to them, user privacy is paramount. Tech companies have usually complied with court orders such as the one awarded to Rachel Thompson, but as a digitally minded population starts to age, this will become an increasingly common problem, and we can’t all go to court.

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Digital wills

PERSONAL LAW Life’s journey can be full of challenges, we’re here for you every step of the way. Viberts’ Personal Law Department is one of the Island’s leading providers of wills, probate and elderly client services. Our team had a wealth of experience and our clients can be confident in the knowledge that we will provide a sensitive and efficient service, giving peace of mind. If you have any questions, however small, about managing your own affairs or those of your loved ones then please contact our Personal Law Team. We can provide a tailored service to assist you with:

> Curatorships > Elderly Client Services > Inhertiance Disputes

> Powers of Attorney > Professional Executorship Services > Wills & Probate

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CORPORATE EMPLOYMENT FAMILY LITIGATION PERSONAL PROPERTY

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Digital wills

says Withers. As a lawyer, she cannot recommend this course of action, but she says it’s common for people to leave sealed envelopes alongside their wills to be handed over after death.

LEAVING INSTRUCTIONS

a will governing the fate of digital assets may not be legally binding as people are ultimately bound by the individual user contracts with the companies that issued the service

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There will be as many as two billion dead Facebook accounts by the end of the century, according to the Oxford Internet Institute. Some people like the idea of living on in digital form, whereas others find it distasteful. Leaving behind instructions will likely be reassuring both for you and your family, but a will governing the fate of digital assets may not be legally binding as people are ultimately bound by the individual user contracts with the companies that issued the service. The Digital Legacy Association has templates for a ‘social media will’, noting this is a ‘statement of preferences’ and not something that can be enforceable in court. Elisabeth Ferrara, a Legal Assistant who specialises in wills and probate at Viberts in Jersey, recommends printing wills and adding physical signatures from you and two witnesses, even for assets that exist in digital form – the law has yet to recognise a digital signature. She also points out that there’s a difference between digital assets and digital presence, and you can only leave provisions in your will for the former. While you can argue that a social media account has value, the problem is that the user is probably still bound by the provider’s terms and conditions. “In Jersey we have [two] types of assets: immovable estate is property and land, and movable assets, which tends to be pretty much everything that isn’t land,” Ferrara explains. This broad definition is helpful, as a social media account that earns

advertising, for example, could count as a movable asset under the law. “The nature of assets is changing with the growth of electronic assets,” says Ferrara – we actually rent a lot of the things we may think we own, she adds. But if the law changes to bring that ownership back into our hands, Ferrara believes the broad definition of movable assets under Jersey law means the jurisdiction should be reasonably well set up to respond to it. Currently, she says, “it is very much up to the company to decide what’s going to happen [to your data] after death”. As mentioned earlier, writing down your online passwords and putting them somewhere safe is technically not allowed, just like you’re not supposed to log into an online service as someone else. But that may not be something that most people consider to be very fair – if you’ve paid for the music, shouldn’t it be yours to do with as you please? And if you give your spouse your computer password, is that really a crime? Rycroft expects the law might change to reflect the fact that people don’t find this fair. “In the US, there’s been much more activity in terms of law reform, [arguing] we should be able to pass these [assets] on.” He thinks the UK will follow suit. “There’s increasing awareness by consumers and there [will be] a backlash eventually.” Until then, the service providers will in all likelihood become better at dealing with the fact that customers die – and hopefully start prompting us to fill in the legacy information rather than hiding the form deep down in the settings. And until the law catches up, while it’s technically forbidden, a lot of us are likely to leave a list of passwords somewhere safe, with instructions to our loved ones to download our assets or close accounts, without needing to go through the formalities. n

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Compliance

Rising stars The compliance officer role is increasingly being seen as a solid route to the top table – a far cry from its former reputation as a backwater job FOR SOME, it’s a role that’s been

pejoratively dubbed the ‘business prevention officer’. For others, the old joke is that you go out to lunch, or even on holiday, and when you come back you find that you’re the compliance officer. Either way, compliance hasn’t had a very good press in the past. But that’s all changing as the increasing demands of regulation, data protection, antimoney laundering legislation, and even international sanctions, all dictate that compliance is an issue boards are taking more seriously than ever. Failure to comply with any of the above can have devastating reputational consequences and can pose an existential threat to any organisation. Compliance, in short, has become a hot issue and a potential ticket to the top table.

technical rules rather than other skills. However, since the financial crisis, there has been a perceived need for better corporate procedures. “At the same time, it’s become more important for compliance officers to interact with client-facing staff and the board – so these have all led to a raising of its stature.” The regulations were in place before the financial crisis, she adds – “but they weren’t

Alexander Garrett

being lived and breathed”. What’s changed since is the level of enforcement, rather than a general rewriting of the rules. Nevertheless, new rules and an everexpanding scope are also drivers of the rising demand for compliance professionals and the elevation of their status. “The reality is that this is an area that will only ever increase in terms of the volume of regulations and the depth of work that will be required,” says Simon

RISING STATURE Malin Nilsson, Managing Director of the Compliance and Regulatory Consulting practice at Duff & Phelps, sees the global financial crisis as the main catalyst for this. “Before the financial crisis, compliance as a profession didn’t have much stature,” says Nilsson. “It was a role focused on

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may well be supported by a number of people beneath them, and will almost certainly be relying on very expensive proprietary systems.”

RECRUITMENT CHALLENGE Recruitment of compliance professionals is challenging in the Channel Islands, not least because of the tight labour market and the difficulties of hiring from outside the islands. Kevin Lazeris, Jurisdictional Compliance Leader at Sanne Group, believes the growing importance of the compliance function has made competition for talent within the field even tougher. “There’s a general regulatory push for stronger and better resourced compliance departments, and closer regulatory scrutiny of the activities of business in turn causes the regulators to need more individuals themselves,” he says. “And, increasingly, the regulators are using their powers to get third parties to do reviews of their regulated firms. That puts more pressure on resources because those professional services firms also need compliance experts.” There’s also the issue of attracting recruits against the backdrop of the fusty image many have of compliance. Active Optimus has recently

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Walker, Chief Operating Officer and Head of Business Advisory at Guernsey-based service provider Active Optimus. High-profile financial scandals have woken the world up to the importance of corporate governance, regulators have become increasingly determined to flex their muscles, and specific areas such as cybercrime and data privacy have contributed towards the drive for compliance on all fronts. Expectations have also changed. “The sheer volume of information available has meant there’s more and more that is possible for you to check. And if you don’t check, then why haven’t you?” says Mark Dunster, a Partner specialising in compliance at Carey Olsen. “There is just a much greater expectation that things should not go wrong, and so a much greater scrutiny of everything that could go, or has gone, wrong.” No incident is too small to be investigated, for reports to be written and lessons learned. “Fifteen years ago, the average compliance officer was probably someone working part time, probably just involved in collection of client due diligence, and not treating this as a particularly complex role,” explains Dunster. “If you fast forward, the compliance officer in any large organisation will be a full-time job,

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Compliance

A compliance officer in any large organisation will be a full-time job, supported by a number of people and relying on expensive proprietary systems

launched a training programme aimed at recruiting the next generation of compliance professionals. Recruits will have the opportunity to move around inside the business, with exposure to a range of disciplines – including compliance – across the spectrum of financial services. They will also receive leadership training and an opportunity to spend time in the Malta business, where they will learn about a different jurisdiction. “It will give them a fully rounded view of all of the consultancy services provided across the group,” says Walker. He believes strongly in presenting company recruits with a vision for the future, in which the role of compliance moves up the value chain from being largely administrative. Technology plays a key part in this. “There’s an ever-increasing burden of new rules and sanctions, but we don’t believe that the best use of your compliance officer is for them to focus on making sure everything is up to date,” says Walker. “Much of that work can be done centrally, with the updating in relation to sanctions and regulatory changes being automated in order to maximise efficiency.” While compliance officer may not become the job of choice overnight, few dispute that perception is changing, both of

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the value that compliance delivers and of its attractiveness as a career. “Some now see compliance as a way to the top; in the past that was never the case,” says Nilsson. “Now, it is a career that has real progression.” Dunster adds: “I think compliance and risk officers are now starting to be seen as one of the necessary people on the board, along with the financial director, and the head of personnel.”

THE RIGHT ATTRIBUTES Finding the right people is not just a question of finding those with an understanding of the rules and with the appropriate qualifications; it’s also about finding someone who knows when to say ‘no’ and when to say ‘yes’. “You’re looking for someone who not only understands the job,” says Dunster, “but has the necessary soft skills to bring a team with them and the necessary commercial awareness to recognise that, in any organisation, there’s bound to be some risk at every turn and to be prepared to make decisions in a commercial way.” That point is backed up by Lazeris. “If we were all ‘business prevention officers’, we could all go sit on the beach because there wouldn’t be any business to do. Shareholders expect some risk to be taken.

So the question is how to be commensurate in how you manage risk.” He sees compliance officers having to be far more proactive in asking questions and believes they will come under increasing pressure to account for why they did not flag up risks and ask awkward questions whenever financial problems surface. He cites recent press reports claiming that in a bid to avoid breaching EU rules on the amount of exposure a fund can have to unlisted securities, fund manager Neil Woodford’s LF Woodford Equity Income Fund (WEIF) had invested in smaller, illiquid companies through specific classes of securities that were listed in Guernsey. Preliminary supervisory inquiries by UK regulator the Financial Conduct Authority (FCA), reported to Nicky Morgan, Chair of the UK Parliament’s Treasury Select Committee, on 18 June, revealed that the Guernsey listings fell within the rules of the EU UCITS Directive. Nevertheless, Lazeris’ point still stands. “The kind of questions that should be asked include these: are assets what the prospectus says they should be investing in? Are they investing in parts of the world where sanctions apply? Are they investing in assets that are of concern to the relevant regulators?” Lazeris also advises those entering the field to read the business pages assiduously. “People ask why. But you may pick up something that in two years’ time proves highly relevant,” he says. Indeed, FCA CEO Andrew Bailey was recently castigated by Morgan for failing to react sooner to a story in Citywire revealing WEIF’s use of The International Stock Exchange in Guernsey. “Does anybody at the FCA actually read the newspapers and listen to what’s going on in the industry?” Morgan asked Bailey. The personal characteristics that are now required to succeed in compliance extend far beyond the attention to detail associated with the role. Curiosity, communication skills and the ability to stand your ground are all cited as important attributes. “You’re not looking for someone who is risk-taking, but definitely someone with ethics and integrity – a strategic thinker who can turn technical details into practical measures, someone who can interact with the board at the top level,” says Nilsson. For companies, perhaps the biggest challenge is to stop seeing compliance as a cost and to start seeing it as a source of value in protecting the business. “One mistake, one regulatory topple, could cost you 20 years of revenue,” points out Dunster. Perhaps failing to take compliance – and compliance professionals – seriously is the biggest risk of all. n

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Monetary policy

post-financial crisis, UK growth has stalled, despite heaps of money being pumped into banking via quantitative easing (QE). there are now calls for A ‘QE for the people’, but what is it and could it be the solution to the low-growth dilemma?

Do we need People’s Quantitative Easing?

BETWEEN 2010 AND 2018, the average real annual

GDP growth rate of Britain has been 1.8%, according to the UK’s Office for National Statistics. This is well below the long-term average, which was 2.8% a year from 1948 to 2007. This is despite a government-approved programme of quantitative easing (QE) that saw the Bank of England pump £445bn into the banking sector over the past nine years. Under QE, the Bank of England bought bonds from banks in exchange for funds, which were then used to buy more assets, pushing up the price of bonds, shares and property. It’s a pattern that was repeated in the US, Europe and Japan, leading to the view, popularised by former US Treasury Secretary Larry Summers, among others, that we’re in a period of ‘secular’ or long-term stagnation. Similarly, others have argued that low growth rates are the ‘new normal’ for advanced economies. Most worryingly of all, this injection of liquidity (now estimated to be a total of $15trn by economic research firm Minack Advisors) has failed to increase inflation in these economies. Indeed, despite near zero or even negative interest rates, these economies seem to be more at risk from deflation than inflation.

Words: Christopher Menon

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Professor Steve Keen from Kingston University, among others, has pointed out that under conventional QE, the money created largely failed to go into the real economy, ending up instead in the financial markets and inflating asset prices. Fran Boait is Executive Director of Positive Money, a not-for-profit group that campaigns for financial

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QE’S SHORTCOMINGS

Monetary policy

Instead of pumping money into financial markets, it could be spent on infrastructure, green technology or as a direct boost to household finances

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reform. He explains that one of the ways QE was intended to work was via a ‘wealth effect’, with asset-rich people spending and borrowing more, boosting the economy. However, he points out that this ‘trickle down’ approach did not work. Just how little actually did trickle down to the masses becomes clear if you examine real average weekly earnings in Britain, which have yet to recover to their precrash level. In February 2008, they peaked at £525 a week, including bonuses, then dropped to £466 a week in March 2013 and are now back to £496 a week. In sharp contrast, Boait points out: “The Bank of England’s own analysis finds that the wealthiest 10% have benefited by £350,000 each as a result of QE.” This analysis isn’t accepted by all, however. Justin Oliver, Deputy Chief Investment Officer at Canaccord Genuity Wealth Management, believes that QE has generally been successful. “The fact that the US economy is now at near full employment, real GDP has consistently been in the 2%-3% range and the Federal Reserve had, until recently, been in a position where it was looking to raise interest rates, are all indicative that the actions of central banks post the 2008 financial crisis had the desired impact.” That said, US economic growth has been markedly lower than before the crisis. Financial analyst Gerard Minack, who runs Minack Advisors, says: “While monetary policy appears exhausted, the blindingly obvious lesson of this cycle has been that fiscal policy works: fiscal expansion lifts growth, fiscal tightening dampens growth.” This view gives succour to proponents

of ‘QE for the people’ such as Boait, who explains: “Instead of pumping money into financial markets, it could be spent via the government on infrastructure, green technology, or as a direct boost to household finances.” This is essentially direct central-bank funding of government expenditure. It’s an idea that, during the last UK general election, found favour with Jeremy Corbyn’s Labour Party and is steadily gaining traction among economists, although it is probably fair to say it isn’t yet enthusiastically endorsed by the financial mainstream. The view of Canaccord’s Oliver is more typical. “People’s QE or helicopter money [a term coined by Milton Friedman for an expansionary fiscal policy financed by an increase in an economy’s money supply] may well be a necessary response to the next financial crisis as the reaction of central banks and governments has had to be ever more extreme in each new cycle,” he says. “Right now, it isn’t required, as the economic picture doesn’t currently warrant this action.” In extremis, perhaps following a stock market crash, this view might alter very quickly. Albert Edwards, Global Strategist at Société Générale, delivers depressing news for those who believe governments will ride to the rescue of financial markets for a second time. “Those who believe that in the next recession more QE (or indeed modern monetary theory/helicopter money) can keep the US’s equity valuations from collapsing relative to bonds are living in a state of deluded optimism in my opinion. Those who

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Monetary policy

Those who believe that in the next recession more QE can keep the US’s equity valuations from collapsing relative to bonds are living in a state of deluded optimism

followed Japan closely in the 1990s know exactly what will happen in the next recession – new cyclical lows in both US price-to-earnings ratios and bond yields.”

REVIVE ECONOMIC GROWTH For Boait, the attraction of People’s QE is that it could help revive economic growth along sustainable lines. “Fiscal and monetary coordination, including via QE for the people or monetary financing, has been used successfully throughout history. Researchers at UCL have found a number of cases where fiscal-monetary coordination proved useful in stimulating economic growth, supporting industrial policy objectives and managing public debt

without excessive inflation.” The UCL study in question, entitled Bringing the helicopter to ground, was jointly written by Josh Ryan-Collins, Senior Research Associate at UCL, and Frank van Lerven, Economist at the New Economics Foundation. It claims: ‘The period of highest levels of domestic monetary financing (1940–1980) coincided with the longest period of sustained low levels of government debt-to-GDP in the 20th century and the highest levels of GDP growth.’ Certainly, runaway inflation would be a possible danger if such a policy were not managed properly. Yet, proponents believe this would be avoided if there were a robust institutional framework that kept decisions about the application of the central bank’s money creation powers separate from short-term political considerations. “For example, the Bank of England could determine the timing and size of any new monetary stimulus, with the government deciding how that money is spent,” says Boait. Given views on the failings of QE so far, there are a growing number of economists and policymakers calling for People’s QE under some name or other. However, it may take another financial crisis before it is actually adopted as UK government policy by whoever is in power. n

QE in numbers

£445BN SPENT IN THE UK SINCE MARCH 2009

€2.5TRN SPENT IN EUROPE BETWEEN MARCH 2015 AND DECEMBER 2018

$4TRN SPENT IN THE US SINCE NOVEMBER 2008

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july/august 2019 67

MORE PEOPLE H AV E B E E N I N TO S PAC E THAN H AV E PA S S E D THE MASTER OF WINE EXAM

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FOR US, IT’S PERSONAL

Pierpaolo, Partner & Head of Wine Buying

The

Knowledge Brain food for the busy business professional

The Knowledge is compiled by Alexander Garrett Automating jobs

Talking

points Today’s homework

There are 373,000 more employees working from home in the UK than there were 10 years ago – an increase of 27.7% – according to recent analysis published by trade union body the TUC to mark National Work from Home Day. The TUC’s research reveals that almost twice as many men as women work from home and the South West has the highest quota of homeworkers, with one in 12 working from home compared with one in 32 in Northern Ireland. Homeowners are 73% more likely to work at home than those who rent. And age-wise, 7.5% of 40- to 59-year-olds home work compared with only 3.4% of 20- to 29-year-olds.

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Artificial Intelligence and automation will have a widespread but mixed impact on jobs, according to the Chartered Institute of Personnel and Development and PA Consulting. The introduction of new technologies at work will see job opportunities grow by enhancing roles, employee skills and pay. But lack of planning risks reducing productivity improvements and leaving people behind. The report, People and Machines: From Hype to Reality, is based on a survey of 759 employers and their employees, and explores how AI and automation are being used in UK workplaces. Forty four per cent of employers introducing AI and automation believe the main jobs affected have become more secure, 18% say they have become less secure. But among employees, 54% say AI or automation has not helped them to do their job better.

The road to profit

Researchers at the Massachusetts Institute of Technology have thrown cold water on the notion that fleets of autonomous taxis will be cheaper to use than owning your own car. Focusing on San Francisco, Ashley Nunes and Kristen Hernandez calculate the potential price for taking an autonomous taxi as $1.58 to $6.01 per mile, versus $0.72 for owning a car. They consider a wide range of costs, including licensing, maintenance, fuel and insurance, as well as the cost of the vehicle itself, and base their calculations on the current rate of utilisation for conventional taxis. Utilisation would have to improve by almost 100% and margins reduce by 37% for autonomous vehicles to achieve cost parity.

Happy now?

Life satisfaction among UK citizens is the highest since surveys began in the 1970s, according to research by the Resolution Foundation, with 93% of Britons saying they are ‘fairly’ or ‘very’ satisfied with their lives. The report notes ‘a very marked upward drift’ since 2000, despite stagnating satisfaction during the financial crisis and since the EU referendum. The research is based on self-reported happiness in response to a number of questions. It finds higher-income households report a higher level of subjective wellbeing, but with diminishing returns as income increases. And while having a job is a key factor in increasing personal wellbeing, loss of wellbeing from losing a job outstrips the gain from getting work. Owning a home is also strongly correlated with wellbeing, with marked regional variations.

Pay more, get less

Funds with the highest fees perform worse than their lower cost competitors once fees are deducted, according to a study by investor rights group Better Finance – overturning the idea that active management is worth paying a premium for. The research involved analysis of 1,970 equity funds in Belgium, France and Luxembourg, looking at net returns over 10 years to 2017. It calculated that on average a 1% – or 100 basis point (bp) – increase in fees resulted in a 68bp decrease in performance above the benchmark. “Fees are nearly single-handedly to blame for the disappointing returns of many actively managed funds,” says Guillaume Prache, Managing Director of Better Finance.

JULY/August 2019 69

THE KNOWLEDGE

New in… BOOKS

Unconscious desires

Out with the alpha

Alchemy: The Surprising Power of Ideas That Don’t Make Sense, by Rory Sutherland (WH Allen, £20, hardback), asks many questions about things that appear to be counterintuitive – or, at least, far from obvious. Why is Red Bull so popular – even though everyone hates the taste? Why do countdown boards on platforms take away the pain of train delays? And why do we prefer stripy toothpaste? Ad man Sutherland’s central theme is that human beings like to think they are rational, but in practice we are not. We are driven by unconscious desires and we are drawn to ‘the beautiful, the extravagant and the absurd’. If you want to influence people’s choices, put reason to one side and find ways to tap into ideas that are more alchemy than rationality.

Work Like a Woman: A manifesto for change, by Mary Portas (Black Swan, £8.99, paperback), is about ‘calling time on alpha culture’, according to the sleeve notes. In fact, Portas, who’s been billed on her TV series as ‘Queen of Shops’, is pretty alpha herself; certainly no shrinking violet when it comes to putting anyone who doesn’t meet her expectations firmly in their place. But here she is dispensing advice to working women on how to make a success of their careers, as well as offering tips to businesses in general on how to make themselves more friendly towards women and their needs in the workplace. Much is based on her own experiences, and the way she has remodelled her own business, stepping down from CEO to be Chief Creative Officer.

Media tycoon

Crisis culprits

If you’re interested in the media tycoons of the golden age of print journalism, Max Beaverbrook: Not Quite a Gentleman, by Charles Williams (Biteback Publishing, £25, hardback), is essential reading. Beaverbrook, owner of the Daily Express in its heyday, was also a politician, a government minister in two world wars, a confidante of Winston Churchill and, before all that, a speculator in financial markets. This biography gives an account of his early years in Canada, how he established himself in the UK, and his fiery relationships with a succession of prime ministers, making the Express the world’s biggest-selling daily newspaper along the way. According to the author, he was also a serial philanderer who was ‘loved and loathed in equal measure’. In short, the kind of character for whom the phrase ‘larger than life’ was invented.

A Brief History of Doom, by Richard Vague (University of Pennsylvania Press, £23.99, hardback), examines a series of major financial crises over the past 200 years in the US, UK, Europe, Japan and China – including the Great Depression and the financial crisis of 2008 – and analyses what was at the heart of each of them. The over-accumulation of private debt is fingered as the main culprit and the best indicator of future financial crises. In each of the cases examined in the book, there was a pattern: the rapid growth of loans produced widespread overcapacity, which then led to the spread of bad loans and bank failures. This, says Richard Vague, is the script that financial crises invariably follow. Happily, he offers some tools for politicians, bankers and others to spot the danger signs and nip the next crisis in the bud.

* All prices are RRP.

70 July/August 2019

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The Knowledge

In numbers: US-China trade PODCASTS

$25,994m

The value of US exports to China between January to March 2019 Source: US Census Bureau data

Media Business MBI, the publisher of weekly trade magazine Broadcast, has launched a podcast exploring the film and TV industries. In the launch episode of the Media Business podcast, Matt Mueller, Editor of fellow MBI publication Screen International, talks to the Director of Film4, Daniel Battsek, to discuss this year’s awards season and what it takes to win an Oscar. Also featured are Elizabeth Karlsen and Stephen Woolley from independent producer Number 9 Films. themediapodcast.com/media-business-podcast-1-the-oscars-business/

$105,974m

The value of US imports from China between January to March 2019. The overall trade deficit is $79,979m Source: US Census Bureau data

Talking About Organizations Talking About Organizations is a conversational podcast that will appeal to management theorists, those in business schools and anyone interested in understanding how organisations work. Each episode focuses on one specific topic, which could be discussions of classical works in management and organisation studies, interviews with authors and peers, or perspectives on management through the lens of history and culture. The podcasters are academics working all over the world. www.talkingaboutorganizations.com

Untold stories Interested in cryptocurrencies? The early days of the movement that still believes it will change the world are charted in this new podcast from Blockworks Group, in which digital movers and shakers tell their ‘untold stories’. The host is investor and entrepreneur Charlie Shrem, Founder of Bitinstant, and guests will include Arianna Simpson, Founder and MD of Autonomous Partners, Jered Kenna, a former US Marine who bought Bitcoin at 20 cents, and Marshall Long, one of the world’s first Bitcoin miners. blockworksgroup.io/untold-stories-podcast

China’s position among US trade partners, worldwide. Last year, it was number 1. Canada and Mexico are now the US’s two biggest trading partners Source: ustradenumbers.com

25%

The highest percentage of tariff imposed by Donald Trump on Chinese imports to the US; $525bn of Chinese goods are in scope for the top tariff Source: BBC News

The price of a bushel of soybeans, as at 13 May 2019 – the lowest price for more than a decade after China targeted US soybean exports for its own tariffs

$7.55

Source: axios.com

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JULY/August 2019 71

THE KNOWLEDGE

How to…

…become a thought leader What is it? Joel Kurtzman, Founding Editor of the magazine Strategy + Business, is said to have coined the term in the first issue of the magazine. ‘To be truly competitive, CEOs and their top leadership teams must not only outexecute their rivals, they must also outthink them,’ he wrote. Today it’s become ubiquitous, but some think it’s too loosely used. “Some people use the term ‘thought leader’ as if all you have to do to earn that moniker is to start tweeting,” says Denise Broussard, CEO of Thought Leadership Lab. It takes much more than that, she continues. “Individuals with expertise, passion and a track record of changing the world become thought leaders when they rise above themselves by sharing their knowledge so others can change the world too.”

Define your area

“Individuals with passion and a track record of changing the world become thought leaders when they rise above themselves by sharing their knowledge”

To be a thought leader, you usually have to specialise in a particular subject area. The more focused the area, the more likely that you will have something original and valuable to say. Better to be a thought leader on the topic of exchange-traded funds, for example, than on funds. Think about where your strategic interests lie, and where you would like to develop a reputation for expertise.

Take it a step further PR company Good Relations has identified three types of thought leadership, each defined by the audience. Organisational thought leadership is about leading thinking and demonstrating expertise in an industry, market or topic. Product thought leadership is about leading thinking and demonstrating market advantage around a product or service system. And individual thought leadership is about positioning an individual as an expert or leader in a particular field. The individual version “is

72 July/August 2019

particularly effective when the individual’s personal story is shown to provide strong foundations to the current platform”, says Good Relations CEO Richard Moss.

Start with a blog It’s the simplest way to self-publish and will get you into the habit of expressing and articulating your thoughts on the chosen topic. It’s also a start to creating a community of followers. To begin with, post on sites such as LinkedIn, Medium and Quora, where there’s an audience waiting to discover you. Or, if you’re a full-time employee, consider posting on your company’s own blog, as it will already have a receptive readership that’s attuned to your industry.

So, what are you going to say? ‘Start with an idea,’ advises US-based Stern Strategy Group. ‘What is your original, innovative, forward-thinking idea that will help your audience navigate the most pressing challenges and create new opportunities? Consider capabilities and knowledge that make you and/or your organisation stand out from the competition.’ You don’t need the business equivalent of Einstein’s Theory of General Relativity, but at the least you must have an original viewpoint on a relevant issue that you can run with.

Develop it Carry out research – both original and desk research – to substantiate your point of view. Draw on your own customer data, then use this to develop your thinking and report the results. Set up your own research group – perhaps in partnership with a business school. And bear in mind that your point of view must be more than a oneliner if you want people to keep coming back – it should evolve as you start up a conversation and build your audience.

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The Knowledge

Business leaders on making it to the top

Getting ahead Amplify

Stephen Burt, Branch Manager, Julius Baer Guernsey

Create a YouTube video; put it on Twitter and other social media channels and ask others to repost. Offer an opinion piece to relevant specialist media, such as trade press. Put yourself forward as a conference speaker, or offer to talk to your local chamber of commerce or other organisations. When you’re ready, produce a white paper that articulates your point of view in great detail. Think about a book – it will open doors and in the digital age still carries more heft than any number of online posts.

What was the first thing you did after leaving full-time education?

Make yourself available

What’s the best and worst piece of career advice you’ve been given?

“Part of putting your name out there is getting your name everywhere,” says Emma Knightley from the Digital Marketing Institute. “Always open the door for inquiries from media outlets and bloggers, especially on platforms that are popular with your target audience.”

You’ll need a thick skin “You will be in the spotlight, which means you may take some pretty painful arrows,” says Broussard from Thought Leadership Lab. But as well as providing an immeasurable boost to your career, being a thought leader will give a real sense of purpose and meaning to your work. “As a thought leader, you will leave a lasting legacy – transformed teams, communities, industries, systems, governments or the world.”

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I was keen to enter the workplace as soon as possible to start my career, so finding a full-time job was at the top of my priority list. In Cornwall in the early 1980s, unemployment levels were fairly high so I jumped at the chance to join one of the clearing banks. Not many people know what they want to do when they get their first job, but my advice would be to throw yourself into it as you never know where it will take you.

How did you get into the world of private banking? I’d been living in Greater London and working in banking, but the combination of a young family and the call of the sea made me look for other opportunities. My wife and I grew up in Guernsey and Cornwall, respectively, and we wanted to give our children the same sort of childhood we’d had: safe, fun and friendly. As a result, I applied and got a job in one of Guernsey’s top private banks.

Being patient and listening to people is definitely the most important advice I’ve been given; you never know what you’re going to learn. I don’t think I’ve ever been given bad advice, but I have certainly made mistakes. I do believe that every mistake is an opportunity to learn and grow though.

How did playing rugby help you with your career? Rugby is a fantastic team game and playing for 30 years, as well as captaining a successful Guernsey Siam Cup side, taught me the benefits of camaraderie, discipline and respect for people with different skills. It helped me learn early in my life that everyone’s skills are important to making a great team, and a diverse skill set among the team is an asset.

How do you turn the psychology you learned as a sportsman into motivating your own teams today? Captaining a successful rugby side has a lot in common with leading the team at Julius Baer. For example, both require a clear vision of what success looks like and being able to communicate that vision is vital. In business, you should play to your strengths, just like in rugby, and, most important, remember to have fun – rugby, business and life are games to be enjoyed.

JULY/August 2019 73

THE KNOWLEDGE

GURU

WATCH

Naomi Klein

addressed in the current era of neoliberal market fundamentalism, which encourages profligate consumption.’ It’s not just about carbon, it’s about capitalism itself, argued Klein, as companies cannot be relied on to do the right thing when profits are at stake. Nor can consumers, who’ve been conditioned to view stuff, air travel and energy-guzzling devices as the hallmarks of a better life. Her remedy is to transform politics, building a new economic system oriented towards the local. f the world is looking for a messiah on climate change who’s She’s recently become closely associated with Bernie Sanders, prepared to influence Washington DC – arguably where the the former Democrat presidential candidate, who’s likely to stand battle most needs to be fought – that could be Naomi Klein. again in 2020. What both share, apart from disdain for Trump, is The 49-year-old Canadian made her name in social activism, belief in the idea of a Green New Deal – a revival of Roosevelt’s especially in her critique of globalisation and free market economic rescue, which would focus on developing renewable economics. She’s the author of bestsellers including No Logo: energy and other solutions to climate change but provide Taking Aim at the Brand Bullies, an analysis of how economic stimulus in the process. global brands achieve domination, and The Shock Unsurprisingly, her next book, out this autumn, is “I feel more Doctrine, in which she calls out governments that use optimistic about our entitled On Fire: The Burning Case for a Green New the aftermath of natural disaster as an opportunity Deal. As she said in a recent article in The Intercept: collective chances to impose radical free market ideas. ‘I feel more optimistic about our collective chances of averting climate A prolific journalist, Klein has become a darling of averting climate breakdown than I have in years. breakdown than I of the American left. She also has a day job as Gloria For the first time, I see a clear and credible political Steinem Chair in Media, Culture and Feminist Studies pathway that could get us to safety.’ have in years” at Rutgers University, New Jersey. Her support for the Green New Deal also puts her She’s made a few controversial judgments – supporting close to Alexandria Ocasio-Cortez, the Puerto Rican Venezuela’s former socialist leader Hugo Chavez, opposing the Democratic senator hotly tipped to become the US’s first female last Iraq War and criticising Israel – but in 2009, she turned her president. Should Ocasio-Cortez make it to the White House, attention to climate change. Her book This Changes Everything: expect to see Klein not far away. But that won’t happen in 2020 – Capitalism vs the Climate declared: ‘The climate crisis cannot be according to the constitution, Ocasio-Cortez is too young.

Process mining

You’ve heard all about business process management and business process re-engineering. The new thing is process mining. As a lengthy article in Harvard Business Review explains, this is all about making your business processes work better and bringing process management back onto the agenda in doing so. Process mining, you’ll be pleased to know, doesn’t involve donning a safety lamp and helmet. It’s essentially a software solution that sets out to address two requirements that anybody wanting to re-engineer faces. The first is to understand fully how your processes work today, enabling you to see where performance problems exist and where investment should be made. The second is to establish clear connections and integrations to your enterprise system: SAP, Oracle, Salesforce or whatever. The people pushing process mining are an array of software vendors such as Celonis, Fluxicon and QPR Software (nothing to do with Queens Park Rangers), who want to persuade your CIO, or your CTO, that there’s another hot item they should be adding to their shopping list. Expect to see a spate of recruitment ads for process miners – it’s set to be the new coalface for the IT crowd.

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BUZZWORDS…

JARGON BUSTER:

ALSO NEW IN THE WORLD OF

Disallocate/ unallocate To close or shut down: “X corporation has decided to disallocate our Smalltown plant from end of 2019”. (Your bank account could go the same way.) Punch a puppy Not entirely new, but still a favourite, to ‘punch a puppy’ is to do something detestable. As in: “If you make him retire after what he’s been through, you’ll be punching a puppy.”

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The Knowledge

Top tech 5G and finance

WHAT’S

HOT PACKING TIGHT Frequent travellers can jettison their suitcase worries with the Vago – a vacuum system that lets you shrink your clothes by up to 50% before packing. The product is a small cylinder that you plug into a power source and connect to the supplied vacuum bags. From $84, vago.com.sg

5G IS A HOT TOPIC RIGHT NOW, AFTER THE UK GOVERNMENT BECAME EMBROILED IN A ROW ABOUT THE SECURITY RISKS OF USING THE CHINESE COMPANY HUAWEI TO DEVELOP THE COUNTRY’S FORTHCOMING 5G NETWORK. BUT WHAT IS 5G? AND WHAT DIFFERENCE WILL IT MAKE TO OUR LIVES?

5G is short for fifth generation cellular network; it follows on from the previous four generations that have been introduced since the 1980s. 1G was analogue; 2G was the first system to offer data services such as text messages; 3G brought in mobile internet access and video calls; and 4G ushered in mobile web access, high-definition TV services, video conferencing and more. And just like these earlier advances, 5G will be much faster than previous generations, with forecast download speeds starting at 1 gigabyte per second (Gb/s) in 2020 and rising as high as 20Gb/s. That means that instead of streaming films, you should be able to download an entire film in less than a minute.

LOW LATENCY The other big difference with 5G is that it will have extremely low ‘latency’ – the amount of time it takes to get a response when data is sent. Latency is likely to plunge from 50 milliseconds on a 4G phone to just 1 millisecond on 5G. So far, a number of applications are set to benefit from the dramatically increased speed at which 5G will operate. One is self-driving cars. Each vehicle will be fitted with hundreds of sensors that monitor the roadside, traffic signals and other vehicles, but also collect data from traffic systems and especially from other vehicles, telling them about accidents and other hazards. The concept is known as ‘Vehicle to everything’ or V2X. The Internet of Things (IoT) is also set to take off with 5G, since it will enable appliances such as your fridge or air conditioning to constantly send and receive signals that will control their operation. Meanwhile, in the financial sector, 5G will also have a significant impact – though it may not be quite as clear cut as in other areas. UK 5G expert Jamie Carter recently wrote that 5G will change ‘how we spend, how we save and how we buy financial services’. Writing on 5G.co.uk, Carter says that in financial services, the improved latency – or speed of response – will be more important than increased download speeds. ‘At the very least, 5G will bring a lightning-fast real-time user

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experience to mobile devices, so that consumers will experience instant banking and payment transactions on their device,’ Carter writes. He also believes that payment technology will surge on the back of wearables powered by IoT. You’ll be able to pay for services from watches or even smart eye-glasses, with a concomitant step up in security procedures such as iris technology, also facilitated by 5G.

FASTER TRADES Stock market trading is also poised to benefit from 5G technology. ‘Speedy buying and selling is everything in the stock exchange, and fractions of seconds can make huge differences worth millions of dollars a year,’ writes Carter. Stockbrokers are likely be among the first to install 5G microwave radio links, to take advantage of almost instantaneous response. 5G could also give a big boost to micropayments – whereby you pay multiple tiny amounts according to your exact usage for services such as car parking, web usage or wifi services. Some believe that 5G will also be used to enhance customer services. According to AT&T, which is at the forefront of developing the US network, ‘One example of a technology that could be powered by 5G is the remote teller. This service would enable customers to get personalised attention via a video session without necessarily finding and travelling to their nearest branch. Teller services could potentially become available wherever the 5G network exists, either on smartphones or via personalised ATMs.’ 5G may pave the way for artificial intelligencebased personal banking services, says the telecommunications company. For example, realtime gathering of a user’s behavioural data creates the opportunity for an adviser to deliver contextaware financial recommendations. Look out for the use of virtual reality in bank branches and even pop-up virtual branches in remote locations. One thing is clear: the future of banking – and other financial services – will take place largely and increasingly on mobile devices. 5G is set to accelerate that revolution.

POCKET GYM Keep yourself fit without going further than reaching for the Activ5 in your pocket – an isometric fitness device that strengthens your muscles through a range of squeezing exercises, and records the results on an app. £130, www.activ5.com

JULY/August 2019 75

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

Great learning boosts performance It’s a simple fact of business that people who know how to use their IT systems properly are more productive and happier at work. At ALX Training, it is our mission to ensure that every person we work with can use their essential applications properly, saving time, smoothing processes and creating a more productive workplace.

Appleby is one of the world’s largest providers of offshore legal advice and services. Uniquely positioned in the key offshore jurisdictions of Bermuda, BVI, the Cayman Islands, Guernsey, Isle of Man, Jersey, Mauritius and the Seychelles, as well as the international financial centres of Hong Kong and Shanghai. We are also the only firm to have offices in all three British Crown Dependencies. Our services include:

Ashburton Investments is an investment manager offering discretionary portfolio, multi-asset and specialist fund solutions to international private and corporate clients including family offices, trustees and wealth managers. While the rest of the industry may have had to come to terms with how the global financial crisis changed the world for their clients, we have simply carried on doing what we have always done – delivering risk adjusted returns through all market conditions.

Our trainers are renowned for their product knowledge, and their friendly and energetic attitudes to training help them get the best from every person they teach.

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Multi Asset is not the latest investment trend to us. It has been the cornerstone of our business since inception, supported by our experienced and longstanding equity specialists. For more than 35 years, we have invested in what makes sense. Our product set and approach to investments has evolved over time to suit ever changing market conditions but the underlying constant is that we understand our clients need to effectively manage risk and we put them at the centre of our thinking.

Wendy Benjamin Managing Partner, Jersey Group Partner, Guernsey wbenjamin@applebyglobal.com

Globally, Ashburton Investments has over £9.1bn under management as at April 2018 with offices in the Channel Islands, United Kingdom and South Africa.

We know there’s no better place for your new colleagues to start learning than during their induction programme, so we develop bespoke induction courses that give your new starters all the information they need to hit the ground running. We can even deliver content online, so training can be ongoing and continuous.

Contact Laythamm Malorey E: laythamm.malorey@ashburton.com T: +44 (0)1534 512010 www.ashburtoninvestments.com

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Independent and Professional We offer a full range of management and fiduciary services to our domestic and international private clients and corporate structure: l Family office - bespoke assurance

l Wealth management - your strategy l Trustee - impartiality with vision

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Be Secure is a consultancy business providing services in the following areas; l GDPR data protection

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Be Secure, in association with partners who are experienced professionals in data protection, technology, cyber security and legal services are working to deliver high standard assurance and advisory services to Channel Islands organisations.

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.

We work as a business partner to your organisation in support of the board of directors, trustees, partners, senior management and staff in managing the governance obligations of data protection in this new GDPR data protection world!

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:

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.

Wendy Warder – Associate Director wwarder@baccata.co.je

As a member of the International Association of Privacy Professionals (“iapp”) and an accredited Certified Information Privacy Professional Europe (CIPP/E), Certified Information Privacy Manager (CIPM), Certified Information Privacy Technologist (CIPT), GDPR Practitioner, ISO 27001 Lead Implementer and Lead Auditor, 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.

Lisette Le Creurer – Associate Director 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 Regulated by the Jersey Financial Services Commission

www.blglobal.co.uk

For further information please contact:

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

Brian Siney, Founder and Director, CIPP/E, CIPM, CIPT, ISO 27K Lead Implementer, Lead Auditor, FCA brian@besecure-consultants.com +44 7797 738743 or www.besecure-consultants.com

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