Our Island’s financial services industry is so interwoven in our contemporary economy, community, international profile and even political outlook, that it is difficult to remember a time when this was not the case. Today, financial services represent approximately 40% of Jersey’s GVA and is the largest sector of our economy by employment.
However, 60 years ago, this was not the case, as tourism and agriculture dominated the local employment market, the Code of 1771 still restricted the interest chargeable on loans to 5% and finance represented only a fraction of the Island’s economy.
Over the last six decades, successive governments have taken steps, alongside the finance industry, to evolve and grow this sector; enhancing the Island’s reputation, modernising our regulatory framework and promoting the industry abroad.
This process began in 1961 when a series of legislative changes, led by Senator Cyril Le Marquand and the Finance and Economics Committee, modernised Jersey’s financial regulations and created room for the first merchant banks to open in the Island. An amendment to the Code of 1771 to remove the restrictions on interest and the Income Tax (Jersey) Law 1961 were quickly followed by the arrival of M. Samuel (later Hill Samuel) in December 1961. Jersey’s financial services sector continued to grow through the 1960s with total bank deposits 10 times the per capita ratio of the UK, at almost £300 million in total, by the end of the decade.
Another milestone came in 1969 when Citibank became the first American bank to establish a presence in Jersey.
No analysis of Jersey’s finance industry would be complete without mentioning Colin Powell CBE, who was appointed to the position of Economic Advisor to the States of Jersey in 1969. Those who remember the late Colin Powell will remember his extraordinary memory, keen wit and charming nature. Colin devoted five decades of his life to Jersey’s Government and was appointed, in 1999, as the Chair of the Jersey Financial Services Commission (JFSC).
The next two decades saw further legislative attention devoted to financial services as the value of the industry to Jersey’s economy and community became increasingly apparent.
Jersey became the first jurisdiction in the world to bring trust and company service providers within a regulatory regime by passing the Jersey Trust Law in 1984.
The 1990s saw an impressive growth in the size of the industry as bank deposits increased from £45 billion in 1991 to £122 billion by 2001. Over the same period the value of investment trusts in Jersey increased from £7 billion to £95 billion.
The increasing size and importance of the finance industry led to the States Assembly establishing the Jersey Financial Services Commission (JFSC) in 1998 and, in 2001, establishing Jersey Finance.
Over the last 20 years, Jersey Finance has provided an invaluable service promoting our local finance industry overseas. They now have offices in Dubai, Hong Kong, Shanghai, London and New York and a global network of contacts to promote our most important industry both locally and overseas.
Further government efforts during the early 2000s included a streamlined regulatory regime and the signing of a number of bilateral tax information exchange agreements with other jurisdictions. This work has been further built on by the Government and the JFSC to enhance the reputation of our Island as a well-regulated and transparent jurisdiction. Jersey was amongst the first international finance centres to be placed on the OECD ‘white list’ as a jurisdiction committed to improving transparency with internationally agreed tax standards and next year will mark the 10-year anniversary of our membership of MONEYVAL.
The significance of financial services on Jersey’s prosperity is well summarised in Balleine’s History of Jersey which pronounces that ‘without doubt the most dramatic influence’ on Jersey since 1960 ‘has been the growth of the finance industry and the Island’s growing reputation as an international offshore finance centre of world renown’.
Most recently, the Government has worked closely with the industry during the COVID-19 pandemic. Readers will be familiar with the efforts companies have made in a number of sectors over the past year to ensure their work could continue. As I said in my preface to last year’s edition of Jersey ~ First for Finance, I have been incredibly proud of the way in which local businesses have risen to the challenge posed by COVID, adapting their working practices, innovating and continuing to deliver for their clients and their employees. This has been particularly true in the finance sector and Jersey Finance has worked closely with other groups including the Chamber of Commerce, Jersey Business, the IoD and Government to support the industry throughout the pandemic.
As we look ahead to the challenges beyond COVID the Government is resolved to continuing to engage with the financial services sector on a range of issues. The sector’s digital transformation is buttressed by the Government’s commitment to enhancing our digital infrastructure. Jersey Finance’s work alongside Digital Jersey and the Digital Academy is an important part of the sector’s evolution as one of the premier fintech centres in the world.
This is just one of the exciting areas where financial services continue to evolve in Jersey and this edition of Jersey ~ First for Finance details many more.
The Government is committed to working alongside Jersey Finance and other industry representatives to evolve the sector in a positive and sustainable way. Our Island is well placed to seize the opportunities emerging in the post-pandemic environment precisely because of the strong foundations developed over the past six decades. As we look back at how far we have come in the last six decades, this edition also offers an opportune moment to look ahead at what the future holds for financial services in Jersey.