Governor Richard Gozney said last night that Britain is right to review the financial services of its colonies — but he is confident Bermuda will pass with flying colours.

Yesterday Premier Ewart Brown said Bermudians should be "offended and insulted" by the probe as he complained about the $2 million a year taxpayer's forked out for Government House. But in a press statement yesterday Sir Richard said: "Given the work and reputation of the Bermuda Monetary Authority and Finance Ministry, and assessments by the IMF, I too have confidence that Bermuda will come out well from this, as from any other objective outside review."

The review is of the financial services of all of the UK's Overseas Territories and Crown Dependencies where financial services are significant, including therefore Guernsey, Jersey and the Isle of Man as well as the Cayman Islands, British Virgin Islands, Bermuda and others, said Sir Richard.

He added: "There should be no question of any intrusion into internal Bermudan affairs, such as taxation and fiscal policy."

The Governor said that because Bermuda is a UK Overseas Territory Britain remained responsible for some important elements of Bermuda's external affairs, notably international obligations including international financial obligations.

He added: "In other words if, God forbid and against every expectation, one of the Overseas Territories or Crown Dependencies faltered over its international financial obligations, the world would look to the UK for explanation.

"At a time of what has become a rather sudden economic recession in many countries, and a steep decline in the value of many classes of assets, it is natural and prudent for the British Government to ask a reputable figure to look at the resilience of all the financial centres for which the UK is responsible."