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PBR: Darling calls for review of regulation of offshore territories

Chancellor Alistair Darling has blasted overseas territories for attracting banking customers with lower tax rates without contributing to the UK Exchequer.

Darling attacked the Isle of Man and Channel Islands in the opening of today’s pre-Budget report and has called for a review of regulatory arrangements in overseas territories.

He said: “At times of stress depositors need to know who is going to compensate them. The British tax payer cannot be expected to be the guarantor of the last resort.”

Darling also pledged to resolve problems relating to the Icelandic Landsbanki and says the Government is reviewing the international compensation arrangements with the European Union. He has asked the European Commission to come back with recommendations on the issue by Spring 2009.

The review will not consider changes to the UK’s constitutional relationship but will focus on issues such as financial supervision and transparency, fiscal arrangements, financial crisis management and resolution arrangements and international cooperation.

The report says: “Many crown dependencies and overseas territories are significant financial centres in their own right and the financial sector plays a vital role in their economies. The Government recognises the progress made by most offshore financial centres to improve financial regulation and transparency, and tackle financial crime.

“However, crown dependencies and overseas territories, like all offshore financial centres, face challenges and opportunities as the world is changing. In particular, severe financial turbulence has raised questions for all jurisdictions, while there is growing international pressure to line up standards of financial regulation and meet international norms with regards to taxation.”

Isle of Man Chief Minister Tony Brown says: “The announcement of this review across the three Crown Dependencies and 14 Overseas Territories is understandable in terms of the turbulent economic climate being experienced around the globe.

“As far as the Isle of Man Government is concerned we welcome this exercise as another opportunity to show that the Island is well regulated, financially stable and internationally responsible.

“The Isle of Man has a strong record of compliance with the highest global standards in the areas of financial regulation, taxation, transparency and international co-operation. This has been confirmed by bodies such as the IMF and the OECD.”

In response to today’s Pre Budget Report Announcement Geoff Cook, Chief Executive of Jersey Finance, said:

Jersey Finance also welcomed the announcement. Chief executive Geoff Cook says: As a leading global financial centre, the review provides Jersey with an opportunity to once again demonstrate the standards of regulation and transparency which have previously been endorsed by organisations such as the Home Office, OECD, the Foreign Office the FATF and the IMF.”

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