Regulation
With the rapid growth of the Isle of Man as an international finance centre came the need to strengthen the Island's image and reputation, with such activities being properly supervised and effectively regulated. This task falls to the Financial Supervision Commission (FSC), and the Insurance and Pensions Authority (IPA). The FSC and IPA, set up by Tynwald in 1983 and 1986 respectively, are charged with developing and operating systems to protect the interests of depositors, investors and policyholders and also the good name of the Isle of Man.
FSC Mission Statement
"To protect the public interest by providing effective regulation and supervision within the Island's financial services sector and to support a competitive environment in which quality products and services are promoted for the economic benefit of the Island."
The Financial Supervision Commission licenses and supervises all banks and building societies, investment businesses, funds and fiduciary organisations carrying out business in the Island. The seven-member FSC derives its powers from Acts of Tynwald (with commissioners appointed by the Treasury).
The Insurance and Pensions Authority, under the provisions of the Insurance Act 1986 is responsible for ensuring those who operate insurance companies in or from the Isle of Man are fit and proper and companies have sufficient resources at all times. Companies must maintain a statutory solvency margin and if reinsurance protection is purchased the security of this must be demonstrated.
The IPA is also responsible for the registration and regulation of insurance intermediaries carrying on general insurance business in or from the Island.
Paramount importance is attached by the FSC and IPA to the protection of depositors', investors' and policyholders' interests. Only institutions of quality, with proven track records which will contribute to the best economic interests of the island, are granted licences. In assessing suitability, both the FSC and the IPA pay careful regard to the nature of the proposed business, the status of the parent company, sufficiency of financial resources, quality of management personnel and the adequacy of the systems and controls necessary to run the business.
In 1988, the Isle of Man strengthened its Investor Protection legislation with the implementation of the Financial Supervision Act. This subsequently led to the Island becoming the first territory to be designated by the UK Government under its Financial Services Act, thus confirming the Island's pre-eminent status amongst international financial centres.
In 1991, the Island radically revised its regulation of investment businesses in the Investment Business Act, which provides for an effective system of regulation to internationally accepted standards. Also, in 1991, the Island introduced a Deposit Protection Scheme - the first offshore centre to do so. The scheme offered depositors compensation of 75% of their deposit subject to a maximum payout per depositor of £15,000. In October 2008, the scheme was amended and now provides for a payment of up to £150 million by the Isle of Man Government to support the compensation of individual depositors to a maximum of £50,000 each. This is in addition to payments into the scheme by banks and recoveries made through liquidation. The changes in the scheme also increase protection for non-individual despositors - including charities and businesses - to a maxiumum of £20,000 (formerly £15,000 under the 1991 scheme). The scheme extends protection to foreign currency as well as sterling deposits. The FSC and the IPA impresses on their licence holders the need to know their customers. Licensed banks and authorised insurers are required to establish 'know your customer' principles to which both management and staff have to adhere. The FSC and the IPA take their role as guardians of the Island's reputation very seriously, for example, warning from time to time of the potential misuse of companies incorporated in the Island but controlled from elsewhere, and of accommodation addresses.
In January 2002, in conjunction with the Island's Financial Supervision Commission and the Insurance and Pensions Authority, the Office of Fair Trading launched the Financial Services Ombudsman Schem. This is a free, independent resolution service designed to handle consumer disputes, in the areas of Banking, Insurance, Investment and Pensions, from customers of Isle of Man-regulated businesses from around the world.
Acknowledgement: Financial Supervison Commission
Contact Details:
Financial Supervision Commission
PO Box 58
Finch Hill House
Douglas
Isle of Man
IM99 1DT
British Isles
TEL NO: +44 (0) 1624 689317
FAX NO: +44 (0) 1624 689398
EMAIL: info@fsc.gov.im
Please click on the Financial Supervision Commission logo for a link to their own website.