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Will Hong Kong Remain The Jurisdiction Of Choice For Offshore Banking?

UK FINANCE RESPONDS TO FCA’S OUTCOME OF HIGH-COST CREDIT REVIEW Responding to the Financial Conduct Authority (FCA)'s publication of the outcome of its high-cost credit review, Eric Leenders, Managing Director, Personal Finance at UK Finance said: “People up and down the country use credit as a helpful means of managing their everyday spending, so we have been working closely with the regulator to develop alerts for customers who may be about to slip into the red as well as a range of prompts that make it much easier to keep on top of finances and reduce costs. The industry is also introducing proactive support where persistent use of an overdraft facility might be a symptom of financial difficulty. We will continue to work closely with the FCA to make overdrafts more transparent and ensure customers take full advantage of the banking services available to them.”

Hong Kong has traditionally been seen as a tax haven and the financial hub of Asia, if not the world. The island is well-known for its zero taxation on foreign residents and corporations. However, the last six months of social and political unrest in Hong Kong has taken a toll on the region’s economy, with both individuals and businesses who have wealth managed in Hong Kong either moving or considering moving their assets to alternative jurisdictions.

James Turner

James Turner

James Turner, Director at company formation specialists, Turner Little, says: “In the midst of the general unrest in Hong Kong, the question on everyone’s minds at the moment is ‘does China really need Hong Kong as a financial centre?’ As Hong Kong enters its first recession in a decade, with the globalisation of finance and rising Chinese control of Hong Kong’s banking industry, Hong Kong’s role is likely to change.”

“Hong Kong has always been seen as having the world’s freest economy with its simple and low tax system, trade freedom, monetary freedom and government integrity. Hong Kong’s status has always been protected by its ease of doing business, it’s unique role between China and the rest of the world and the rule of law. But if it loses its status as one of Asia’s top financial centres, it could be disastrous,” says James.

“There is no lack of competition for financial centres, and investors can easily turn to other cities such as Singapore, Tokyo and Shanghai. Unsurprisingly, safety fears are also prompting the ultra-wealthy to consider other jurisdictions when it comes to offshore banking and asset protection. While there is no definitive answer as yet, to what will happen to Hong Kong as a financial centre, it’s financial system is still holding up against weeks of unprecedented public unrest.

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