Next step in transition towards new regulatory funding model
The next step in the transition towards a new funding model for the regulation and oversight of the Island’s finance industry will be implemented on 1 April 2022.
Fees payable to the Isle of Man Financial Services Authority will increase by 20%, as set out in a public consultation last year and following Tynwald approval of the related legislation.
This also takes into account the outcomes of a review to assess the impact of the COVID-19 pandemic on the financial position of regulated entities and designated businesses.
The fees increase is in line with the announcement made by Treasury in the 2020 Budget to reduce the level of financial support the Authority receives from the Isle of Man Government.
The current funding model is considered unsustainable in the long term and in need of revision.
Further engagement will take place to help establish a fee structure that strikes an appropriate balance between industry and public funding. The intention is to better reflect the nature and scale of activities being carried out by regulated entities and designated businesses.
Any future changes will be implemented on a phased basis and will consider a range of factors, including industry feedback and input from independent advisers.
Firms in the Isle of Man are subject to relatively low fees for regulation and oversight compared with similar jurisdictions, and levels have not altered significantly for many years.
At the same time, the resources and costs associated with maintaining a world-class regulatory environment, in which businesses can compete and flourish, continue to increase.
Treasury Minister David Ashford MHK said: ‘Good regulation and economic growth go hand in hand. The Island’s reputation as a well-regulated and innovative finance centre is a major selling point for firms competing in the global marketplace. We believe that increasing industry’s contribution towards the cost of regulation is appropriate and aligns with international best practice. It will also enable our limited public finances to be used for other essential services in support of the Island Plan.’
A further consultation in the second quarter of 2022 will invite feedback from key stakeholders on the way forward, as part of the commitment to openness and transparency.
Bettina Roth, Chief Executive Officer of the Authority, said: ‘While next April’s increase in fees may be viewed as significant in percentage terms, the amount in pounds sterling will be relatively modest for most regulated entities and designated businesses. Looking further ahead, we see a more dynamic fee structure as an essential element in moving towards a predominantly industry-funded model where the fees charged are more proportionate to the regulatory work being carried out.
She added: ‘This transition represents a step change for the regulatory environment in the Isle of Man. The process will be carefully managed over the coming years, including full consultation and engagement with industry.’