STEP have today issued their joint research report with First Names Group compiling the results of their surveys into the perceptions relating to doing business with offshore financial centres.
It is an interesting read, in particular, because, in some cases, it compares the offshore and onshore perception of the same issues. For example, when comparing the perception of the impact of the Panama Papers, nearly twice as many onshore (85%) thought the leak would adversely effect offshore business than those actually offshore (44%).
The report combines the results of two surveys: ‘Offshore Perceptions’ (for offshore practitioners) and ‘Onshore Perceptions of Offshore’ (for onshore practitioners). The surveys together received 1,041 responses: 538 offshore and 503 onshore. Many onshore respondents were accountancy and legal firms whilst the trust companies were in the majority of those who participated offshore.
The surveys covered four broad sections but I am concentrating on the regulation and compliance part. The first question on compliance was to do with its burden. Offshore were asked to what extent compliance had become a burden whilst those onshore were asked to compare their perception of the burden and whether they thought the burden offshore was greater.
Both surveys showed that respondents thought compliance has become a burden. Well, that is no surprise. Perhaps the question should have been whether compliance had become an even bigger burden than last year. Also as expected, the burden is perceived to be greater offshore at least to a moderate extent.
The next question was whether onshore understood their obligations whereas offshore were asked whether they could satisfy their compliance obligations. 99% said yes to both but “confidence was highest in the Crown Dependencies”. Again, that’s no surprise.
Training was the topic of the third question and, again, there was a slight difference between the questions to those answering the Onshore survey to those answering the Offshore survey. Onshore were asked whether they were increasing compliance training whereas offshore were asked about their investment in technology for such training. The answer was yes to both.
The next, and probably the most important from an economic perspective, is whether the reporting obligations are deterring clients, in particular, in relation to the extra cost.
Unsurprisingly, everyone believes that “compliance is having a big impact on clients”. Some say clients are restructuring and many are relocating onshore. The final question asked who were the clients most effected and, generally, it was the small, low value clients together with those who could not prove they were tax compliant.
On a non-compliance note, it was good to see that “the role of the ‘Trusted Advisor’ is widely seen as the main growth area in future (66% onshore and 77% offshore), with compliance (47/50) and tax advice (60/42) also seen as important.” On the other hand, de-risking by large banks is having a big impact offshore. I think this highlights that there are still good opportunities for Guernsey.
I do recommend you take a look at the report –