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Calls from Guernsey for greater mutual recognition of financial
regulatory standards have been endorsed in a new report from an
independent think tank.
The Institute of Economic Affairs has made the recommendation as
part of a report on improving global financial services regulation
and fostering economic growth and innovation after the UK leaves
the European Union.
The IEA has also called for the reinstatement of Section 270 of
the Financial Services and Markets Act 2000, which offered a
marketing route into the UK for non-UCITS funds that was well-used
by Guernsey funds before the introduction of the EU's
Alternative Investment Fund Managers Directive.
"The UK should also actively encourage investment funds
presently managed from London but domiciled in the EU to move their
domicile back to the UK, Crown Dependencies or Overseas
Territories," the report stated.
Dr Andy Sloan, Acting Director of Strategy at Guernsey Finance,
the promotional body for the Channel Island's finance industry,
said that the key messages of the IEA report resonated with
Guernsey Finance's new development strategy, launched earlier
this year. An important element of that new approach is to leverage
Guernsey's global distribution capabilities for investment
funds.
"The IEA support for leveraging mutual recognition across
investment funds regime is something we strongly support and
applies not purely in the Brexit context. We have been regularly
making this point ourselves and are raising the issue at IOSCO in
Budapest in May," he said.
"We also endorse the IEA's support for moves to enhance
the Channel Islands' ability to complement the UK investment
management sector post-Brexit by reinstating the mechanism for
recognition of funds regimes. We believe this particular move
strongly enhances the UK's competitive position."
The IEA, which describes itself as "the UK's original
free market think tank", proposes that the UK should form
alliances with other major financial centres, and make
comprehensive bilateral agreements based on mutual recognition with
the financial centres of its Crown Dependencies.
It also suggests that the Crown Dependencies' status of EU
equivalence recognition should be copied by the UK as part of the
withdrawal from the EU to 'allow financial services to continue
smoothly post-Brexit'.
"The Crown Dependencies and Overseas Territories are assets
to the City of London that can allow the UK to build on its global
network," the report said.
Dominic Wheatley, Chief Executive of Guernsey Finance, added:
"Guernsey, the Channel Islands, the Crown Dependencies and the
Overseas Territories complement, not compete with the City, and can
really support UK competitiveness post-2020. IEA's recognition
of these points is a very welcome development and we hope more and
more opinion formers and influences take this message on
board."
Guernsey's funds industry and authorities want to see the
UK, as it evolves its own regulations, adopt mutual recognition
post-Brexit.
Guernsey Finance has welcomed the report, which supports many of
the island's views on how the UK should approach regulation
from March 2019, and how Guernsey can assist the UK to continue to
be a leading financial centre outside the EU bloc.
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