The interview: Miles Celic

As CEO of TheCityUK, Miles Celic has a unique view of UK-based financial and related professional services. He spoke to Businesslife about the relationship between the UK and the Channel Islands and how that may change post-Brexit

The Channel Islands often cite their proximity to London as a key selling point – what’s your view of the relationship between the islands and the City? 

The Channel Islands are a fundamental part of the British family of financial centres. There’s a really strong relationship between TheCityUK, Jersey Finance and Guernsey Finance, and across the industry overall. We’re also about to follow the Channel Islands’ lead and become a third country as regards the EU. And a lot of the work we’ve done looking at the future regulatory relationship between the UK and the EU27 has been informed by the experience of the Channel Islands. 

That’s proving to be very helpful as we work out our position. We’ve had ongoing discussions at both the working level and senior level. I was in the Channel Islands recently so that I could pick up on speaking to business leaders about their concerns and focuses, and tell them what’s going on in the UK. And Dominic Wheatley [CEO of Guernsey Finance], Lyndon Trott [Chair of Guernsey Finance] and Geoff Cook [CEO of Jersey Finance] are regularly over here at our events.

In fact, Geoff and Lyndon are both members of our advisory council – our most senior gathering of industry figures. So it’s a deep partnership between centres that are competitive, compelling, attractive places to be. 

Do you think there’s a perception that the Channel Islands are one entity rather than two separate jurisdictions?

There’s the lay audience, and then there’s the industry audience, which is more informed. Anyone familiar with our industry absolutely has the right perception of the Channel Islands. They recognise the distinct strengths each offers – Jersey in wealth and fund management, for example, and Guernsey in pensions and insurance – and can see how well they interact with London and other UK financial centres. 

But the lay audience often doesn’t fully grasp the scale of activity that takes place in these centres, and it’s our job to address that. If you showed someone the Z/Yen index of global financial centres, they may be surprised to see Jersey ranked higher than Madrid, or Guernsey ranked higher than Monaco.

These are fantastic success stories that people don’t necessarily know about. But together we’re working on doing a better job of communicating and advocating for the UK’s family of financial centres. 
    
Have leaks such as the Panama Papers affected the view of the Channel Islands from a reputation standpoint?

Whenever you look at regulatory issues, and the Panama Papers are part of that, you have to see the broader context. There’s undoubtedly a broader issue around reputation and trust in business in general. Financial services have a clear challenge in dealing with the legacy of the global financial crisis. But it’s equally important for us to make the case for the impact that this industry has on people’s everyday lives. 

As well as paying more than £72bn in tax – funding healthcare, services and infrastructure – the industry also makes it possible for people to have success and prosperity in their lives. If you want a mortgage, to save for kids to go to university, want to retire, expand your business, or you’ve been taken on by someone else who’s done so, the ecosystem of financial services makes all that possible. 

The industry has made great cultural strides over the past decade or so, with drives for international tax transparency, for example. And this is one of those times when we need to convey how we’re upholding those standards. 

Where do you see the biggest opportunities and growth areas in the finance sector in the years ahead?

Fintech is an enormous opportunity. We’re in the middle of huge transformative change. People often ask me when financial services is going to have its Uber or iTunes moment, a disruptive player coming in and changing everything, but I think that misses what’s already happening. We’re seeing a more fundamental evolution – the number of people accessing their banks through apps, for example, has doubled in the past year or so. 

Then there’s the rise of robo-advisers, such as Betterment and Nutmeg, which are creating phenomenal opportunity in terms of financial inclusion. These platforms can offer financial advice on a pot that’s a quarter of the size they used to, because the economics are different. That has a transformational, democratising effect on people’s ability to save. 

If you look at places like Africa, there are huge opportunities for companies in the UK and Channel Islands to really make a difference. The Channel Islands have been fast, nimble and able to move quickly and maintain high standards. That’s a fantastic foundation for future success.

What do you see as the biggest challenges?

We clearly face political risk. The potential rise of protectionism around the world could easily lead to markets fragmenting. And there’s the rise of alternative centres in other parts of the world. I’m a realist. While London, Guernsey and Jersey are massively successful financial centres today, Florence, Venice and Amsterdam used to be the leading centres of previous ages. We’re very conscious of that.

I am, however, an optimist too. Just because someone else is doing well in this industry doesn’t mean you’re doing any worse. We have terrific partnership opportunities of working with Chinese companies, for example. 

But it’s important to think of Asia as more than just China. By 2030, there will be more than three billion people in Asia’s middle-class, up from half-a-billion today, all rising in prosperity. More and more people are gaining the ability to aspire to a better life for themselves and their children, to invest more, save more, and have better lives and retirements. We’re living through an incredible change in humanity, and our industry can play a fundamental part in that. 
    
What, if anything, is TheCityUK doing to raise awareness of the money flows that the Channel Islands funnel to London?

Jersey Finance and Guernsey Finance have done some powerful reports on that, which we draw upon a huge amount in our own work. We work closely with them both, on how we can best highlight the value of our financial services ecosystem. The Channel Islands are a vitally important part of that picture, and that plays into everything – from the top level of our advisory council, to detailed policy interactions. 

With regard to Brexit, have you forecast the impact on financial services in the UK?

We commissioned a consultancy to conduct some research right after the Brexit vote. They looked at a spectrum of potential outcomes – from a high-access Brexit on EEA terms (the Norway option), to a low-access Brexit under WTO terms (the so-called ‘no deal Brexit’). We found that up to 4,000 industry jobs may be lost to a high-access Brexit. That’s not insignificant, but should be seen in the context of the 2.3 million UK jobs in this industry. At the low-access end, 35,000 financial services jobs could be lost.

But it’s worth noting that people have used Brexit as an accelerator for strategic decisions that they would have taken over the next 10 years anyway – the impact of the rise of Asian centres, of where customers want to do business, and the implications of the technological developments I’ve discussed. We’ve seen progress since the turn of the year – on the transitional period being agreed, which is important for the industry, and on the future of the regulatory relationship. 

We’ve been arguing for a system of mutual recognition, which would be more sophisticated and beneficial than the current third-party equivalence. All this on top of the plumbing issues – the need for contract continuity so that customer disruption remains minimal. We’re optimistic we’ll reach the point where economics and pragmatism will take precedence over politics and the process.

There’s been speculation about the UK becoming its own ‘offshore sector’. What’s your take on this?

It depends what you mean by offshore. Many people take it to mean a low-regulation centre. People in Brussels will sometimes ask whether we’re in danger of becoming Singapore-on-Thames. To which I say: ‘Singapore is one of the best regulated finance centres in the world’. I’ve dealt with Singapore a lot – that’s an absolutely top-notch regulator. 

London knows that it can only be successful over the long term if there are rigorous standards in place, balancing strong regulation with the habit of being competitive, so that nobody anywhere is talking about a bonfire of regulations, a race to the bottom. 

Look at [UK Brexit Secretary] David Davis’s speech a matter of months ago – he made it absolutely clear that there’s no appetite for that approach within the UK government. And I’ve seen no appetite for it in industry, or among UK regulators. 

Are there any areas in which the City could learn more from the Channel Islands?

We will continue to look to the Channel Islands for experience of dealing with the EU as a third-party regime and not being part of the single market. The Channel Islands have been enormously successful by being nimble – they’re small and fast, and can seize opportunities. The EU tends to be slower moving, but instead it has the benefit of enormous scale. 

The UK will need to find a path that works between those two models. We have experience of that from our time in the EU, but we will look to the Channel Islands for learning about how to be a quick, nimble centre that can evolve to grab the opportunities of the future.