Accountability & Corporate Governance
The Board of the Isle of Man Financial Services Authority
The Isle of Man Financial Services Authority (“the Authority”) is a Statutory Board. The role and responsibilities of a Statutory Board and its members are set out in the Statutory Boards Act 1987 (except where this Act is varied by the Financial Services Act 2008 and the Insurance Act 2008) and in Council of Ministers guidance. Appointments to the Board of the Authority are approved by Tynwald.
The Board of the Authority consists of not less than seven qualified people appointed by Treasury and approved by Tynwald. The Board currently comprises a Non-Executive Chairman and Non-Executive Deputy Chairman, the Chief Executive and further Non-Executive Members. The quorum of the Board is three Members.
Members normally go out of office between two and five years after appointment, as set out in the documents of appointment, and their remuneration is set down by Order.
Meetings are held on a regular basis and additionally on an ad hoc basis as required.
The constitution of the Authority and its functions are described in Schedule 1 to the Financial Services Act 2008 and Section 1 of the Insurance Act 2008. These Acts provide that the Treasury, after consulting with the Authority, may give the Authority written guidance or directions of a general character. This must be in the public interest and not to influence particular cases, nor to prejudice the operational independence of the Authority. The Authority must take account of any such guidance and comply with any such directions. The Authority’s Board members are responsible to the Treasury for the proper operation of the Authority and its compliance with the requirements of the Financial Services Act 2008, the Insurance Act 2008 and the Retirement Benefits Schemes Act 2000.
As a regulator, the Authority is subject to challenge in carrying out its functions, and is financed partly out of public funds. These factors impose a strong responsibility on the Authority to demonstrate that it is acting properly at all times, in the same way that the Authority expects a similar behaviour from its regulated entities.
The Authority operates under a Corporate Governance Framework which incorporates the requirements of the Isle of Man Government Corporate Governance Principles and Code of Conduct. The Authority is required to report annually on its compliance with the Government’s Code of Conduct, in the form of a Statement of Internal Control signed by the Chief Executive and submitted to the Chief Financial Officer.
The Authority’s internal risk management framework focuses on risks which affect its ability to achieve its statutory objectives and goals. The Authority considers the impact and probability of risks crystallising on an inherent and a residual basis after controls have been applied. An important part of the way in which the Authority manages risk is the assessment of residual risks against agreed risk tolerance levels to identify those risks which are outside of tolerance; this informs the Authority’s strategic aims and the prioritisation of its resources and is also a key driver of the work of the Risk and Control Committee, a committee of the Board. A copy of the Authority’s Enterprise Risk Tolerance Statement can be found here.
It is important that the Members of the Authority have the necessary knowledge and experience of the financial services industry to allow them to suitably discharge their duties. In order to attain the relevant knowledge and experience it is possible that, through their employment history, existing roles or other associations, Members have private interests which could result in a potential conflict of interest in matters to be considered or determined by the Authority.
For public confidence, it is important that the Authority’s regulatory action is taken in the light of full information and is unaffected by any improper influence. It is therefore important that any conflicts of interest that could or do arise are identified and effectively managed.
The Authority has a Code of Conduct which sets out how Members’ interests are declared, managed and, where relevant, published.
Memoranda of Understanding
The Authority has entered into a Memorandum of Understanding (“MOU”) with the Isle of Man Treasury. This MOU sets out the framework for co-operation between the Treasury and the Authority. In particular, the MOU establishes arrangements to ensure that the Authority is accountable to Treasury for its actions, and clarifies the circumstances in which liaison and dialogue could flow between both parties.
Accountability and scrutiny
The Authority is accountable and subject to scrutiny in the following areas:
- Tynwald: appointment of Members, Corporate Plan, annual report and new legislation;
- Tynwald: the Chief Executive of the Authority is invited to appear before the Economic Policy Review Committee each year to provide oral evidence to the committee;
- Government and Treasury: strategic objectives, legislative policy and proposals, budgeting and funding and financial controls over employee related costs;
- Industry and public: consultation on regulatory and supervisory proposals;
- Financial Services Tribunal;
The Authority’s regulatory and supervisory approach is also subject to ongoing review by standard-setting organisations including the International Monetary Fund and MONEYVAL.
The Authority is subject to the Isle of Man’s Freedom of Information Act 2015 (‘the Act’). The Act enables Isle of Man residents to submit requests for information about the Authority as described on the Isle of Man Government’s Freedom of Information website.
The Authority operates within a budget agreed with Treasury. The Authority’s revenue and expenditure is subject to an annual audit by the Government’s external auditors, and the Authority is subject to review by the Government’s internal audit department. The Authority publishes its financial statements each year as part of its Annual Report.