Reflections on STEP Global Congress 2016

Tuesday, 2 August, 2016


Catherine Grum, Head of Family Office Services, KPMG

For many it seemed like STEP’s second Global Congress could not have come at a better time. The UK’s decision to leave the European Union occured less than a week earlier and the political climate was also heating up elsewhere with impending elections in the US and across Europe as well as increasing instability in other parts of the world. The implications of these events will take months and years to be fully understood but, with 300+ delegates attending from [44] different countries, and speakers spanning both civil and common law jurisdictions, there was already much to catch up on.

Martyn Gower set the scene perfectly in the first keynote address, taking us through some of the changes that have taken place in our industry over the past 25 years. From the technical rules trying to keep pace with the shrinking world, the unprecedented access to information that our clients now have, through to the changing politics and potential reputational repercussions of getting things wrong; all contribute to the current storm many of our clients are weathering.

We were fortunate to also hear from Philippe Lourtie TEP on the work being done by the Hague Conference on Private International Law in an attempt to address some of these issues and build bridges between the many and varied legal systems of the world to create greater legal certainty and access to justice. It surprised many quite how much of the work being done was of direct impact on day-to-day practice, from the Hague Convention on the Law Applicable to Trusts and on their Recognition through to works around adoption, maintenance, matrimonial regimes, the protection of adults and so on. The work being done by the Convention does not end with the signing of a treaty, and much of their time is spent working with states on an ongoing basis to bring them together and help them to operate the terms in practice.

A common theme throughout day one highlighted some of the challenges of advising internationally mobile clients. Dr Frans Sonneveldt TEP presented a scenario where four countries sought to tax the same event to demonstrate the complexity that can arise, particularly when applying both tax and succession laws. The presentations that followed also examined the diverse range of attitudes to the use of trusts globally and the variety of different mechanisms being employed as ‘will-substitutes’ to pass assets on death as well as a case study to bring some of these aspects together.

This set the foundations for the discussions that followed looking at some of the frontiers STEP members would be crossing in the next few years such as the ever-increasing variety of family situations. When advising the next generation of families, not only will advisors have to ensure they take into account the growing number of different legal constructs for civil partnerships and same-sex marriages internationally but, as Nancy Golding QC TEP, highlighted, we may also have to start including consideration of the potential use of genetic material posthumously.

Day one was brought to a close by Oisin Lunny who addressed some of the more practical boundaries in the private client world that could be transformed over the coming years with the rise of new technologies. His mention of the increasing addiction to phones as the device of choice was not lost on many in the audience who subsequently stole a surreptitious glance at their own mobiles, and his observation that the next generation show an increasing willingness to trade privacy for convenience left delegates with much to think over during the evening’s reception and dinner.

With Oisin’s parting comments still fresh in many people’s minds, the stage was well set for day two’s focus on transparency and managing risk. These two topics might not have been high on the STEP agenda five or ten years ago, but they are of increasing concern to many clients. As the pace of change in these areas vastly exceeds the ability of many to keep up, but their actions will nonetheless be judged by hindsight’s 20:20 vision. Philip Marcovici TEP led the morning’s first panel session with guest speakers Jeremy Carver CBE from Transparency International, Philip Kerfs of the OECD and the Rt. Hon. Clare Short, former Chairwoman of the Extractive Industries Transparency Initiative. This discussion sought to address whether all countries were yet ready for automatic exchange of information. It also posed some questions for the audience over whether it was still legitimate to take a defensive stance towards this or whether we will start to see a change in approach in the same way we have seen a shift in the corporate world, with companies now vying to be seen as the greenest or most socially responsible. The session concluded with a challenge for those present to consider what their and STEP’s role should be in this context.

Some of the more practical aspects of transparency were then addressed in the following sessions. It was acknowledged that there are challenges with the current approach to reporting caused by inaccurate data having been collected historically and that there would be some interest from clients looking to buy time in those countries that were later adopters of measures such as the common reporting standards. However, both panels of practitioners ultimately advocated a proactive approach involving the review and simplification of structures, testing whether all aspects were really required and the choice of jurisdiction focusing on a flight to quality.

The remaining sessions largely focused on managing some of the risks facing not only our clients but also the wider industry and some IFCs in the wake of the Mossack Fonseca data theft. Jeffrey Robinson gave some insight into the world of the professional fraudster and the challenges facing those trying to combat this growing threat. Advice was also on hand as to how to help heirs that find themselves in the unfortunate position of inheriting not just an estate but the legacy of undeclared assets, and also how to manage the media in these and other situations where a client’s reputation and assets that may be on the line.

Martyn Gowar TEP opened the Global Congress by reminding us that there has never been a storm that has not come to an end. With the challenges we were addressing over the Congress, and so much going on around the world at the moment, these were wise words indeed. Calmer seas will return again but in the meantime our clients needs us now more than ever.