Commerce & Employment

Dairy Industry Review – 1

I was a member of the Dairy Industry Review Board that presented a report to the States in September 2014 setting out the future strategic direction of the industry. The history of reports in this area has been fraught and I was therefore delighted that we managed, for the first time in 15 years, to have a report passed by the States. The report was amended by Deputy Fallaize, which instructed C&E to come back to the States by July 2015 in relation to a distribution system that it thought worked best for the industry. The majority of the Board of C&E, including me, supported this amendment. My speech on the amendment is given below. See my later post on the speech I made in main debate.

Sir, I would like to advise that, as a member of the Dairy Industry Review Group and C&E Board, that I believe that the re-presentation of propositions that this amendment provides represents a positive way forward for the States to consider the Dairy Industry Review.

Proposition 1 sets out our 10 point plan for the future, as described in detail in the DIRG report. There is merit in having what we consider to be a vital, practical and integrated plan set out in this way.  We are happy for it to be explicitly stated in the recommendations to give complete clarity, which is an important theme in this Review.

Of all the aspects of the review it is, and not for the first time, the matter of distribution and retailing that is where contention lies.  Proposition 2, by seeking to direct the Department to take a second and longer look at that topic away from the general review should ensure that the most important and urgent elements of the report, such as the modernisation of the Milk Ordinance, the partnership between the farmers and the Dairy and the freeing up of the retail price of milk, can be delivered without delay.  And we can at last begin on our journey towards the modernisation of the dairy Industry.

Here I’d just like to respond to a question asked by Deputy Laurie Queripel regarding extending the fixed retail price. I can advise that the Board can see no merit or reason for doing so as the milk distributors have exclusivity of licences and zones until the end of 2015, so they will have the same protection as now.

I have found undertaking the review of the Dairy Industry fascinating on a number of levels;

Firstly, in learning about the history of the Guernsey breed,

Secondly, in finding how milk gets from the cow to the carton,

And thirdly, realising the importance of Dairy farming in preserving Guernsey’s natural environment and its biodiversity.

I will speak on these during main debate, as it is these areas that are crucial in understanding the future of the Guernsey Dairy Industry.

And I’d just like members to note the word I used there –  Future. This review is entitled ‘Dairy Farming in Guernsey and the Future’.

I want to emphasise that point as the other aspect of this review that I have found fascinating and which I will speak on now, is how it has become abundantly clear to me that this industry has been so suffocated by its past.

And nowhere more so than in the Distribution system. The means of getting milk from the Dairy to the shop or doorstep. It should be so straightforward but it has had a difficult history to say the least.

I have spent countless  hours researching how we have ended up with the current system of distribution. I’ve read countless reports and articles, spoken to many people and interrogated the Director of Client Services over many hours to get a picture of how we got here and what “here” actually is. I would actually like to thank the Director for the time he has afforded me over this.

It was evident, from all the research I did and from the meetings with the GMRA, that because of this history going back decades, it might not be possible to resolve matters in just a few months . As someone who likes to come up with solutions that all parties can accept, and who came into the review with a genuinely open mind, I found this aspect very disappointing.

The Board came up with a compromise way forward for the distribution system, which we make clear in paragraphs 271 and 272 of the report,  isn’t the optimum system for the industry as a whole.

Personally, I do not think that it makes any sense to prevent the shops from picking up their own milk and dealing direct with the Dairy. I have calculated that it costs one of the major supermarkets over £75,000 a year to have milk delivered to its stores. That makes no sense at all.


We’ve also got the situation where we have one distributor that delivers to one entrance of the PEH and another that delivers to the other entrance. Again it makes no sense at all to me and suggests that there are costs in this system that need not be there.

BUT a compromise was made.

I will not go through what I think the optimum system of distribution is now, or how we get to it, that is for another day if, and I hope when, this amendment is passed, but we do not have it now.

I thank Deputy Fallaize for this amendment which gives us a way to maintain much needed momentum in bringing about change where full agreement exists while having a little longer to work with stakeholders in the one area where there is disagreement.

The last thing we can afford to end up with is another missed opportunity to make positive changes and have a report that gathers dust amongst the many others over the last 10 years, at Raymond Falla House.

Finally, I reiterate what I said before, in my view, this is an industry which in some aspects is suffocated by its past but in others is ready for new challenges and developments.  As a States we really have a duty in 2014, for the good of all those involved, to help it to move on and enable the Dairy Industry to look to the future and a positive one at that.

If we don’t make a decision today to support all the propositions laid out in this amendment  and put it off yet again, just letting history repeat itself, we are seriously in danger of losing what we are trying to protect.

I therefore support this helpful amendment and urge all members to do likewise.

Guernsey Finance Funding

At the December 2013 States meeting, Commerce & Employment presented a report requesting additional funding to Guernsey Finance from the Strategic Development Fund. I am delighted that it received unanimous support and topped off a successful couple of weeks for the Department. My speech is below.

Sir, A few months ago we gave the go ahead in this Assembly for approximately quarter of a billion’s worth of pipeline capital projects. That was the easy bit. The hard bit is finding the money to pay for it. Yes we can look at taxing more but that can only go so far. If we want to spend money on new schools, deep water berths and maintain and improve our health and education services, we need to be proactive and bring more money into the island.


While we do need to focus on developing new industries, and it will be giving nothing away to say that this is a key part of the Economic Development Strategy that will be made public early in the new year, such initiatives are not going to result in immediate changes to our economic structure. Neither can we expect them to completely replace our finance industry. An industry we should be proud of by the way.


So what do we mean by the finance industry? Well its not one amorphous lump. Just as we talk about retail as being one sector but in actuality covers a huge variety of different business types, so too the finance industry is incredibly varied and probably more so in Guernsey than anywhere else in the world. The depth and breadth of Guernsey’s offering is an extremely big selling point and explains why the  multiplier effect of new business in this sector is so great.


This goes beyond the 4 main sectors of banking, funds, insurance and fiduciary. Just a quick review of the Guernsey Finance website provides a clear understanding of what we can offer. These include cleantech, family offices, captive insurance, intellectual property, investment management, custody services, foundations, private equity, commercial insurance, managed trusts, limited partnerships and a recent addition, image rights.

It is this breadth and depth that has probably protected the Island during the recession better than many other jurisdictions.

And the entrepreneurism and innovation continues to evolve.

On Monday I attended the launch of the new Channel Islands Aircraft Registry, an initiative that has the very real potential of delivering positive benefits to our finance industry. However, it’s all very well having a great new product, but we have to tell the world about it and demonstrate that Guernsey can provide a full suite of support services for the high net worth individual and others on the back of it.


We need to get our message out there. What we have on our side is the years of expertise, local talent and innovative approach but we have to actively demonstrate it’s worthwhile coming to Guernsey versus all our competitors across the globe. We can’t expect to have business beating on our door anymore.

Life is very different from a decade ago. There is more competition for a start and sources of new business have shifted. We need to be constantly ensuring we adapt and are not left behind.

And the value of Guernsey Finance is showing a joined up approach. It is all very well businesses going out there individually, which many do and will need to continue to do,  but what Guernsey Finance can do is show Guernsey is open for business – demonstrate stability in the jurisdiction and a welcoming attitude to those that provide business opportunities that will benefit us.


The present funding levels might be ok if nothing had changed but it has. We have to seek out new markets whilst at the same time maintaining our existing relationships. If we are going to fund Guernsey Finance we need to ensure it is funded properly for today’s reality. Otherwise we end up with an unsatisfactory compromise when our competitors are pouring money into their equivalent organisations. These include Luxembourg, Dublin and Malta. Closest to home of course is Jersey Finance, which earlier this year was granted £4m and we are told it can expect more.

To me paragraph 47 in this report says it all. The application of resource at the right time is a key factor in success that is widely recognised. GF’s assessment is that delays in initiating work  to raise awareness and establish networks in target jurisdictions is placing the Island at a competitive disadvantage. Entering markets later is more difficult , more expensive and less effective.

Speaking to senior members of the finance industry it is clear that they believe GF has a major role to play. In particular the following 3 areas of work were considered crucial;

1.  by adding significant value to the various Industry associations such as AGB, GIIA and GAT.
2. by organising forums where industry can come together to discuss new opportunities for the jurisdiction, including issues such as where new market opportunities are emerging and considering where Guernsey could introduce new legislation to take advantage of developments internationally.  Here GF both facilitate and provide insights from their international discussions especially based on their access to foreign governments and industry associations (this is especially the case in places such as China where regular visits and high level contacts have developed relationships which would not be accessible to industry representatives directly.
And finally 3. Through international Seminars and workshops GF delivers events  where local industry professionals can showcase the finance sectors’ key attributes particulary new developments and local responses to international developments such as AIFMD or FATCA.

So, it is not just about selling Guernsey. It is finding out what is happening in the marketplace, what our competitor jurisdictions are doing, where the gaps are and ensuring Guernsey is on the ball.

If Guernsey is to continue to be the innovative centre it is in the future, we need to invest now.

If a job’s worth doing its worth doing well and I urge members to support this report to enable Guernsey Finance to do just that.

Financial Services Ombudsman

I was pleased to be a Member of the Commerce & Employment Board that put forward the successful report into the creation of  a Financial Services Ombudsman at the December 2013 States meeting. Due to the large amount of reports going through the States at the end of the year, this had been delayed for 2 months. However, we got there in the end and the report was passed. My speech is below.

Sir, this has been a long time coming. The need for a  financial services ombudsman has been talked about for decades.

That could be explained by the view that Guernsey has such strong financial services regulation and it would mean extra cost without any perceived benefit.

Indeed, I have to say that for many years, as someone working in the finance industry I did question the need of a financial services ombudsman and whether the industry should have to pay more on top of rising licence fees.

However, if, like me, you have been contacted by a parishioner who tells you that the money they had put aside and invested for their retirement had been mismanaged and that they could not afford a lawyer to fight their case without using up the funds they had left and with no guarantee they would win, you will realise why it is essential we have such an Ombudsman in Guernsey.

According to the UK FSO website, 9 out of 10 people say they have no complaints about their bank, insurer or financial services firm and most financial transactions take place without any problems.

But, sometimes things go wrong and sometimes the financial services business does not sort things out to the customers satisfaction. It is then that the FSO can help out.

That the GFSC provides no support here was evidenced by my parishioner who was told to go to an Advocate. Great, but they don’t come cheap.  I believe  bringing in an FSO will make the former give more attention to the retail side of financial services, rather than the institutional focus that it has had to date. At the same time the proposals take into account concerns from industry that the need for an FSO to cover all aspects of the financial services sector, such as Class B funds aimed at institutional investors, is unnecessary.

This is about protecting those people who aren’t rich sophisticated investors with enough capital to fight their case through the courts. This is about helping those people we should be supporting  those who carefully save throughout their working life to pay for their retirement but would not be considered wealthy by any stretch of the imagination. These are people who have taken responsility for their own lives trusting in professionals to invest their money wisely. These are people who won’t be a burden on society, and we have a duty to ensure that they have some level of protection. At the end of the day this will save us money.


The G20 High Level Principles on Financial Consumer Protection , adopted by the Organisation for

Economic Cooperation and Development in October 2011, include –

Jurisdictions should ensure that consumers have access to adequate complaints handling and redress mechanisms that are accessible, affordable, independent, fair, accountable, timely and efficient. Such mechanisms should not impose unreasonable cost, delays or burdens on consumers. In accordance with the above, financial services providers and authorised agents should have in place mechanisms for complaint handling and redress. Recourse to an independent redress process should be available to address complaints that are not efficiently resolved via the financial services providers’ and authorised agents’ internal dispute resolution mechanisms. At a minimum, aggregate information with respect to complaints and their resolutions should be made public.


Whilst there will initially be costs that will be spread across industry, which is not ideal, I believe this is the necessary approach  to take before we build up a good enough picture of who the most complaints are directed at and making sure those are the businesses that pay.


And whilst I am probably one of those who is more sceptical than others about to how far we can work with Jersey, I do believe that this is one example of where sharing the service will keep costs down, and that we should be working with our sister Island to reduce the burden on industry.

So, I urge Members to support this report to help to support improvements and reduce disputes; help financial businesses themselves to resolve disputes with consumers; resolve any consumer disputes that financial businesses fail to resolve themselves; and reduce the burden on the courts.

Revision to Companies Law

I made the following brief comment at the November 2012 States meeting;


I just want to make a few brief points. Firstly,  it is clear that there has been considerable consultation.  I had seen various earlier proposals during the consultation process that I wasn’t sure about, but am satisfied that the changes outlined now seem sensible.

In particular, the expansion of those professionals who will be able to incorporate a company is logical. At the moment it is expensive to have to go to a CSP when you want to set up a company. Widening those eligible should have the effect of bringing down costs and allow those requiring a company, for whatever reason, to receive a more joined up service.

I also welcome the areas that seek to dispense with certain requirements for small companies and to make the audit exempt waiver indefinite.  These can only help smaller businesses as it effectively reduces red tape, even if just in a small way. I hope that  in the next few years we will see similar changes that help our small businesses even more.

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