The Isle of Man has seen continuing growth in the financial services sector according to the Isle of Man Financial Supervision Commission's 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 also notes that the offshore sector as a whole continued to be highly competitive, with quality business increasingly focusing 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 also commenced a major project to consolidate and modernise its financial services legislation. As part of this work the FSC has put forward important proposals to enhance its accountability and transparency. In addition, the Commission has 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, and its reputation as a responsible centre is therefore paramount. An important recognition for the Commission, after careful vetting, was an invitation 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 FSC believes 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 up over 40% on the comparable period last year, providing 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 and the licensing process itself has now commenced and is well under way.
The Commission took steps further to strengthen its own arrangements for good corporate governance. Going forward, the FSC 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