Staying in shape

For more than three decades, robust and innovative trust legislation has been at the heart of Jersey's wealth management offering.

It's testament to the quality of the original drafting that only on a limited number of occasions since its enactment in 1984, has the Trusts (Jersey) Law been amended. It's also evidence of its enduring appeal among trust practitioners and the reason why Jersey's trusts legislation has been used as a blueprint in many other jurisdictions.

The clarity of the language, the balance created between the interests of settlors, trustees and beneficiaries, and the supporting role played by thirty years of world-class jurisprudential consideration have all contributed to its success.

However, it has never been a rigid piece of legislation. Driven by global trends and changes in the needs of private clients, recent years have witnessed the introduction of innovations such as trusts with unlimited duration, the ability for settlors to reserve powers and the introduction of non-charitable purpose trusts.

The arrival of the Jersey Foundation on the statute book in 2009 provided a civil law alternative to traditional trust structures, while practitioners will also recall the latest amendment in 2013, rendering into statute Jersey's law on mistake and the 'rule in Hastings-Bass', which was welcomed as an exciting development within the global trust industry.

A new fitness test

The Trusts (Jersey) Law 1984 will soon come under scrutiny again, as the Jersey government prepares to consult on a number of new proposals designed to ensure the successful and continued evolution of this key statute.

Based on a sensitive appreciation of trends in the private client space, these proposals will explore, among other topics, the question of beneficiaries' rights to information, and the availability and appropriateness of mechanisms designed to bring about the variation of trusts.

The proposals form a natural step in the evolution of the Island's trust offering, which has needed to take into account the increasingly global nature of the wealth management industry and the shifting patterns of wealth.

For instance, research suggests that the wealth of high-net-worth (HNW) individuals is expected to reach $64.3trn by 2016, representing almost $12trn in new HNW wealth since 2013 (RBC WM/Cap Gemini World Wealth Report 2014).

Furthermore, evidence suggests that wealth is accumulating in newer markets with, for example, the size of the HNW population in the Middle East having increased by 16 per cent during 2013; Africa by 7.3 per cent; and Asia Pacific by 17.3 per cent.

All this is against the backdrop of a global drive for greater transparency and concerted moves by governments, led by the G20 and OECD, to crack down on tax evasion and fraud around the world.

Good housekeeping

Having introduced legislation in the late 1990s which made tax evasion a criminal offence, the Jersey authorities have consistently followed best international practice, with strong and effective regulations designed to fight financial crime.

Jersey led the way as one of the first jurisdictions to regulate its trust industry, requiring trustee and company service providers to be licensed by the regulator, the Jersey Financial Services Commission, abide by codes of practice, and hold themselves subject to inspection and supervision. Where appropriate and necessary, details about Jersey entities are also made available to foreign authorities through Tax Information Exchange Agreements.

However, Jersey has also taken a mature approach to balancing transparency on the one hand, and ensuring on the other that those who use its services are given an appropriate degree of confidentiality, and high levels of data security.

Current wealth management trends present a real opportunity for international financial centres (IFCs), but only those that can demonstrate strong regulation, a genuine focus on transparency, and a commitment to appropriate innovation.

With this in mind, Jersey is not complacent about its status as a leading IFC for trust business and remains motivated to investigate enhancements to its offering that will widen its appeal.

Anchored by its commitment to robust regulation, the latest proposals to changes in its legislation present a further opportunity for Jersey to stay in good shape, reach out to both established and new international markets, and attract increasing levels of high quality private client business.

Geoff Cook is the CEO of Jersey Finance

He writes a regular blog about Jersey for Private Client Adviser