Jersey throwing shade at Neil Woodford won’t quiet the tax haven’s critics

Don’t even think about it” was the message of Jersey’s Financial Services Commission (FSC) to embattled fund manager Neil Woodford, who had been looking at the British crown dependency as the base for his next venture. 

The one-time star stock-picker has been under a dark cloud ever since the collapse of his Woodford Equity Income fund, an event Britain’s Financial Conduct Authority (FCA) has been investigating for 18 months and counting. 

A month or so ago, he broke cover in The Sunday Telegraph, revealing plans to start a new operation based in the bailiwick. Looks like it’s time for a rethink. 

“Anyone who gets off the plane thinking that Jersey is a soft touch has wasted the price of the ticket. Jersey is not the place to come if you are trying to get around UK regulation, or any other regulation for that matter,” fulminated the FSC’s CEO Martin Molony in an interview with the FT referencing Woodford. 

Punchy stuff indeed. “Surprising,” was how those statements were described when I ran them past a couple of former regulators of my acquaintance, particularly given this came before the putative application had even been made.

What’s a down-on-his-luck fund manager to do now? Try Guernsey? I understand that Sark is trying to double its population, so perhaps jump in a horse and cart after a quick ferry trip to register on the car-free island? 

But while a (much) longer spell of silence would have been welcome from Woodford, this isn’t really about him.

Yes, there are many, many questions still to be answered about the collapse of his fund and many, many aggrieved investors seeking redress. Yes, the FCA needs to pull its finger out or it won’t just be Treasury Committee chair Mel Stride making a fuss about the deafening silence from Britain’s chief financial watchdog, which, from the tone of these comments, Molony appears to want as his BFF. 

In this particular drama, however, Woodford appears to have been cast in the role of convenient patsy. 

Consider Jersey’s position. EU parliamentarians have been pushing for the island to be added to a “tax haven blacklist”, and with it no longer being able to hide under the UK’s wing in Brussels, they might get somewhere with that. 

It isn’t just Europe that’s casting a harsh spotlight over its affairs. In a list of corporate tax havens, the UK-based Tax Justice Network ranked Jersey as seventh most aggressive in the world, based on 20 different criteria. 

There are dark clouds rumbling over the dependency. 

Seeking to discuss the comments with the FSC, I found it had reverted to type and hidden itself back under its bushel. My approach was met with a lot of questions via email (what would you like to check in about, what would you like to discuss, etc) before the watchdog went silent. 

But such discussions were scarcely necessary. It isn’t hard to divine the FSC’s motivations. Given the controversy surrounding him, Woodford makes for a convenient target. Publicly putting the boot in to him, while cosying up to the FCA, delivers an easy win, if a cheap one, especially when others are probably going to do the same at some point. 

Sure, the status of Jersey as a tax haven and its financial regulation are, in theory, two different things. In reality, it’s a small island and they’re intimately connected. Two sides of the same coin, so to speak. 

That may be seen as a cynical view, but then, this is a cynical move on the part of the FSC, which could have quietly told Woodford to sling his hook after he’d actually applied – if he’d applied. 

What it won’t do is quieten down any of the questions surrounding Jersey and its status. 

As for Mr Woodford, I wouldn’t be at all surprised if his next move wasn’t to seek a sunnier island for his venture’s incorporation. There is no shortage of tax havens with doors open to all comers, so long as they have the money.