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Isle of Man Reports on Further Growth in its Financial Sector - FSC Annual Report 2005/06 17 July 2006

Douglas, Isle of Man, 17 July 2006 – Continuing growth in the financial services sector is reported by the Isle of Man Financial Supervision Commission (“the Commission”) in its Annual Report for 2005/06. Deposits rose by 19% and funds under management and administration by 76%. The sector continues to be a major contributor to income and employment on the Island.

Together with the Government’s fiscal strategy of introducing zero rate corporation tax and a cap on personal income tax, the Commission outlines a confident and competitive position from which the finance sector can plan its future growth. The Annual Report notes, however, that over the last twelve months the climate remained challenging and there was a continuing focus on reducing costs.

The Report notes that the offshore sector as a whole continued to be highly competitive, with quality business increasingly focussing on well-regulated jurisdictions like the Isle of Man.

The Commission continues to consult regularly on its policy initiatives and frames its approach in the light of industry feedback and standards set internationally.

The Commission commenced a major project to consolidate and modernise its financial services legislation. As part of this work the Commission has put forward important proposals to enhance its accountability and transparency. The Commission also set out a mechanism under which there would be involvement of the industry in the setting of regulatory strategy.

This project will also embrace innovative proposals for the regulation of e-money, to be drawn up in conjunction with the e-business sector which continues to have strong growth potential.

The majority of the Island’s business is transacted with customers and institutions in other countries. The Island’s reputation as a responsible centre is therefore paramount. An important recognition for the Commission, after careful vetting, was the invitation which it received to become a full signatory to the IOSCO Multilateral Memorandum of Understanding, signifying its ability to co-operate and provide assistance to other regulators. This should further assist in ensuring that Isle of Man-based businesses enjoy access into major markets overseas.

For the last two years the number of new incorporations of Isle of Man companies has continued to increase. Currently the number is over 40% up on the comparable period last year. This provides a very positive background against which the new Manx corporate vehicle will be launched.

During the year legislation for the licensing and supervision of trust service providers was enacted. The licensing process itself commenced and is now well under way.

The Commission took steps further to strengthen its own arrangements for good corporate governance. Going forward the Commission will be giving more public explanations of the standards which it sets for itself, as well as how it is complying with its own internal codes.

In line with this objective and reinforcing the Commission’s commitment to transparency, key highlights from the Annual Report also included –

  • a detailed explanation of how the Commission is organised and how the Board operates,
  • an outline of the Commission’s corporate business plan in two parts: the first identifying the initiatives set out in last year’s report and performance against them, and the second describing the Commission’s objectives as submitted for the Government’s plan for 2006/07.
  • detailed Divisional reports on how the Commission carries out its regulatory, supervisory and enforcement functions, and on the actions which it takes,
  • the performance of Companies Registry, and
  • an outline of how the Commission approaches its strategy on information technology.

The Commission has published accounts under the Audit Act 1983.

The IMF has indicated that, at the Island’s invitation, it will be revisiting to carry out a further review of its regulatory and supervisory arrangements, either at the end of 2007 or early in 2008.

The Annual Report can be viewed on the publications section of the Commission’s website, http://www.gov.im/fsc/doclibrary/publications.xml. Hard copies can be obtained from its offices at Finch Hill House, Bucks Road, Douglas, Isle of Man IM99 1DT, British Isles, telephone +44 1624 689300, email fsc@gov.im.

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