Interview with Chris Eaton, Chief Executive Officer of the ILS Group
By: Liz Corlett
31 May 2009
How would you describe the health of the Fiduciary Services sector at present?
The general indication is that it’s pretty healthy. There’s some pain for certain firms in the UK and further afield which have niche products and services: they have lost staff and portfolios and in some cases, have found themselves legislated out of existence. Most fiduciary service providers on the Island, however, are fairly generalist in what they do and are either healthy or not far off it.
How does ILS’ profile compare with that of other fiduciary service providers (FSPs) on the Isle of Man?
If you strip out institutionally owned corporations which don’t focus on fiduciary services as their core business, there are approximately 170 licenceholders on the Isle of Man; some of these are parts of larger practices. ILS is amongst the top 4 or 5. We are Island-owned but have a global footprint and are truly independent. Clients requiring offshore structures are able to choose wherever best suits them; we do not offer a ‘one size fits all’ product.
When analysis was done on which FSPs had weathered the 2008/09 recession, and how, it was shown that those which had, had done so because of diversification – of client base, product range, and scope of activities. In this way, should one area ‘goes down’, it doesn’t hurt too badly.
By what criteria did ILS decide to base its main offices in the Isle of Man?
In 1991, we chose the Isle of Man because of its good corporate and personal regime, and we would do it again tomorrow on the same basis. The 2006 Companies Act, while not unique, does give the Isle of Man an edge. The Island has not always marketed its strengths as aggressively as it could have done; some of its counterparts have been more competitive with their marketing spend. The UK, Europe and the Middle East should be the Island’s targets, and the marketing should be a joint initiative between the public and private sectors.
How does the Island’s regulatory regime affect the nature and success of Fiduciary business?
Regulation in the Isle of Man has traditionally attracted major corporate clients. There are now more multinational corporations looking to base themselves here in the next 2-3 years than ever before, and that’s due to our regulatory regime and tax planning agreements.
The inclusion of the Isle of Man in the OECD White List (of jurisdictions which comply with the global standard for tax co-operation and information exchange) was good for its public profile but no-one knows yet what the long-term effects of the White List will be.
There will be a loss of certain private client business from traditional sources, due to a decrease in confidentiality, and we’re bound to see a certain amount of business migrating to other jurisdictions but we’ll also see bigger, better set-ups due to increased transparency.
The current regulatory environment seems daunting from the outside but there are opportunities for large corporations if they are prepared to work within the structures. The key is to build business models in such a way as to adapt to the new environment.
What do you perceive as the main challenges facing the Fiduciary sector in the next 5-10 years?
Service providers must embrace change: be prepared to reorganise their business and diversify their client base or find opportunities declining.
The Opportunities are out there, they're just not those of a decade ago.
ILS has worked very hard over the last 4-5 years to identify where wealth is being created – for instance, in Eastern Europe and South America – and will provide services in those places. The Isle of Man is still our ‘powerhouse’ but certain operations may be better elsewhere. For us, it’s strategically important to focus on what we don't do best as well as what we do – and to stay focused.