The result is that an increasing amount of an adviser’s time is now devoted to keeping a weathered eye on regulatory changes that may affect the choice of products and services we make for our clients. But are we looking at this in the wrong way?
If we as international advisers are serious about our profession, then surely the work done by regulators actively supports what we are ultimately trying to achieve – to assist our clients within a framework of enabling legislation that promotes and protects transparency of the products and services we advise on.
Going forward, it is very clear that international products and services will only be useful if they can accommodate the ever growing number of requirements for exchange of information and tax agreements. International finance centers understand only too well that if they want to appeal to the widest possible number of users, they have to become fully compliant.
Sometimes events force the regulatory hand. Take current proposals being considered by HMRC applying to Qualifying Recognised Overseas Pension Schemes (QROPS). Part of HMRC proposals require that anyone with a QROPS should not benefit from tax relief that is not available to residents. This means financial centers are now having to look at their own QROPS legislation to ensure they remain compliant.
Unexpected benefits
An unexpected benefit of any regulatory shake-up is increased competition between centers. The days when they could just sit back and wait for the money to roll in are well and truly over. Nowadays, the centers’ authorities make tremendous efforts to attract new business by getting out into the world and promoting themselves as well regulated jurisdictions, offering well supervised and compliant enabling legislation to cater for new markets.
This is healthy and has, for example, led to centers such as Isle of Man, Guernsey and Jersey putting Foundation Laws on their statute books, to appeal to those who are less familiar with the trust concept. This, in turn, has opened the doors for us advisers to offer a new kind of estate planning vehicle to our clients and with a choice of jurisdictions, each one providing an appreciable difference in scope.
We are witnessing very similar goings on in the Arab Gulf at the moment. Using strong regulatory building blocks, Bahrain, Dubai and Qatar all have aspirations to become the leading international finance centre of the region. Current events are ratcheting up the competitive stakes.
Right now, we see Bahrain’s political stability being compromised. And regulatory changes by Dubai to its investment fund sector making businesses in the UAE nervous. Both situations have enabled Qatar to nudge itself pole position. It’s no coincidence that the Doha-based Qatar Financial Centre Authority has hired Bob Wigley, former chairman of Merrill Lynch’s Europe, Middle East and Africa business, to tell the world about this fledgling, but ambitious new centre.
So while we may continue to moan about regulators, let’s not forget that we as international advisers benefit from a transparent and stable regulatory infrastructure and ensuing increased competition. It’s up to each of us to make the most of the situation.
David Howell is chief executive officer of Guardian Wealth Management
