The British Government, at the eleventh hour, withdrew the vital Financial Services Bill from debate in the House of Commons on Monday afternoon because it expected defeat on the key area of beneficial ownership in relation to the Crown Dependencies and Overseas Territories.

MPs across the House, already fed up with many changes to the parliamentary programme, now feel a significant part of the blame for this lays firmly at the door of the Crown Dependencies.

They are particularly irritated by the delay in debating this Bill, which is one that has to be passed before Britain leaves the European Union — and time is now incredibly short.

This Bill is one of a number of key pieces of legislation needed to prepare Britain for the possibility of a “no-deal Brexit”.

There were clearly going to be a majority of MPs voting for the cross-party amendment on beneficial ownership and this action by the Crown Dependencies is going to do nothing except put these MPs’ backs up.

Questions need to be asked about why the Government caved in to the demands of three Crown Dependencies ahead of MPs’ wishes.

Also, the decision to campaign on this issue by the Crown Dependencies needs to be seriously questioned by other politicians in those jurisdictions.

It can be easily argued that what the small cliques of those in power in the Crown Dependencies have done has been reckless, and simply has to be called to account.

It is of utmost importance that the Crown Dependencies have good relationships with the majority of MPs, and not only those running the government of the day.

This foolhardiness could all badly rebound on Guernsey, Jersey and the Isle of Man, and it is now essential to engage in a damage-limitation exercise.

This has to involve a rethink on what the priorities are and how to go about achieving them.

Should the Crown Dependencies be more financially transparent?

We know that the governments of Guernsey, Jersey and the Isle of Man made last-minute efforts to oppose the British Parliament’s attempts to impose public registers of beneficial ownership on all Crown Dependencies and Overseas Territories.

The British Parliament was going to debate an amendment to this effect by leading MPs — Dame Margaret Hodge (Labour) and Andrew Mitchell (Conservative).

They wanted Britain and its territories to lead the way in clamping down on money laundering. They still do.

They described the British Crown Dependencies and Overseas Territories as tax havens, an accusation many of the territories would strongly dispute.

However, was and is fighting these proposals the right way for the Crown Dependencies to go about proving their financial transparency?

A lot of MPs are well aware of how advanced the Crown Dependencies have become, individually and collectively, in respect of improved financial regulation, so that particular argument has been well put across.

What some in authority in the Crown Dependencies do not seem to understand, is that all these improvements, even when some are in advance of other jurisdictions, are not sufficient in the eyes of MPs.

The last-minute efforts to influence MPs to defeat this amendment have been successful because the Bill has been withdrawn for now, but has left a dark taste in the mouth.

It will come across that the Crown Dependencies are covering up full financial transparency, and therefore can only cause more reputational damage.

Unfortunately, it also causes Britain reputational damage, too.

It may even make more MPs determined to legislate for the Crown Dependencies in the future on many even less contentious matters.

In other words, these efforts by the Crown Dependencies are likely to backfire because of resentment caused to MPs. All avoidable and unnecessary.

To make matters worse, the Crown Dependencies have been misleading MPs on their constitutional position

British MPs’ proposals have been described as “inoperable”, but specific reasons as to why this is so are not given.

An argument that the Crown Dependencies “are not represented in the UK Parliament, and that it is a respected constitutional position that the UK does not legislate for the Crown Dependencies on domestic matters without our consent”, simply does not cut any weight at all.

The issue of British parliamentary representation is a separate issue, but certainly long overdue. The reasons for the lack of it are as much the fault of the powers that be in the Crown Dependencies as the fault of the British Government for not bringing it about.

This issue simply highlights one of many areas where the Crown Dependencies do need parliamentary representation to fight their perceived corner.

As for this issue of legislation, Britain has always had the right to legislate for the Crown Dependencies. It is only since the development of our “offshore finance centres” over the past 40 years or so that some people have started to put their own interpretation of the constitutional position, rather than what the true position is. There is also an argument that this new interpretation of the constitutional relationship has come about because of new vested financial interests being at play. Because of this action by the Crown Dependencies, many in Britain and elsewhere are going to think that financial interests there have too much influence with their governments.

Do the Crown Dependencies governments have public support for their actions?

Bearing in mind the magnitude of what has happened, it has to be questionable as to on whose behalf the Crown Dependencies’ governments were acting.

Have they been acting for vested financial interests, or for their own citizens?

It is debatable as to how much authority the three Crown Dependencies’ governments have to act as they have done on this issue.

It has never been a particular election issue, so none of the senior politicians concerned with this can argue that they have a democratic mandate.

In fact, many people in the Crown Dependencies dislike the image of “offshore financial centres” that they have, and they believe that their economies are far too dependent on the financial sector.

Certainly this issue of beneficial ownership will really bother only a few people in the financial sector, rather than the general public. So when some of these senior politicians from the Crown Dependencies attempt to persuade MPs to their point of view, it is fair to ask: “Just who are they representing?”

People in Guernsey, Jersey and the Isle of Man are entitled to maintain that their “authorities” are “not acting in our name”.

Why all British territories should be singing from the same hymn sheet

Withdrawing this Finance Bill has simply delayed it, for what many will perceive to be no good reason. The issues are still going to have to be debated and voted on.

It has to be pretty obvious that if Britain is presenting itself to the world as getting its financial transparency in order, such efforts have to include the British Overseas Territories and Crown Dependencies. Otherwise, those territories will be seen as a convenient loophole, one that the City of London has long had a very profitable relationship with for some time.

It is important, too, that there is level playing field at work on this issue.

This means that Britain, the Crown Dependencies and the Overseas Territories need to be working towards the same objectives, singing from the same hymn sheet.

It is simply not consistent to have the three groups of Britain, the Crown Dependencies and the Overseas Territories operating with different agendas.

So Guernsey, Gibraltar and the British Virgin Islands, for example, should have broadly the same financial services legislation, in line with British requirements.

It really is time for them to be all working together, and not having this conflict, which the Crown Dependencies have been engaged with — and some Overseas Territories have done so as well.

It is also not helpful for the Crown Dependencies to argue that this Bill is dealing with “domestic legislation” for them, which they argue they are normally consulted on. Many would argue that this is not “domestic legislation”, and even if it was, Britain has every right under its good governance responsibilities to legislate as it sees fit.

As for consultation, the Crown Dependencies have had an immense amount of it already, so no one can argue that it has not been more than sufficient.

The need for the UK to consider financial compensation

It is far better to recognise that all the Crown Dependencies and Overseas Territories who are involved in the “offshore financial sector” could never have done so without the tacit agreement of the British Government. Therefore, if any British territory suffers financial income loss through any changes in financial legislation — and, in this case, the proposals on beneficial ownership — then the British Government should step in with financial assistance.

If Britain sets the lead, the rest of the world must follow

There is, of course, a need for a worldwide level playing field and clearly a number of countries need to improve, including the United States. The British Government, therefore, needs to be seen to be taking strong economic measures against any country that does not take the same sort of action as that of Britain.

Champagne corks off

No doubt those in power in the Crown Dependencies will be full of praise for what they see as a victory. They will be celebrating, along with some of those involved in one sector of the financial sector. However, their actions, unless they change course quickly, will result in more British MPs and the British public having a worse opinion of the Crown Dependencies.

Is that a good thing? I somehow think not.

• Anthony Webber, a political commentator, is a former Member of Parliament in Guernsey States from 1991 to 2004