Isle of Man: Business Environment
Trust management, particularly for wealthy UK individuals, has been a traditional business for the Isle of Man. Successive tightenings of UK anti-avoidance legislation have reduced the possibilities for UK citizens, but trust work continues to be significant; many Collective Investment Funds are of course based on Trusts. The introduction of the purpose trust will probably lead to an increase in corporate trust work.
The Isle of Man has a well-developed legal and financial infrastructure for trust management. With a large established base of trusts, and a growing reliance on corporate work, the volume of trust litigation is becoming significant.
In common with many other offshore jurisdictions, the Isle of Man responded to pressure from the OECD by tightening up its regulatory regime.
Until 2005, trustees were not licensed or supervised by the Financial Supervision Commission, unless the fiduciary carried on business in investment, banking or insurance, in which case licences were required under those headings.
The Fiduciary Services Act, 2005, extended the Corporate Service Providers Act 2000 to require persons who, by way of business, provide certain services to trusts and partnerships or act as nominee holders of units in unit trusts, to hold a fiduciary licence.
The licensing of fiduciaries brought the Isle of Man into line with similar arrangements already established in other offshore jurisdictions such as Bermuda, Guernsey and Jersey and an external review of the proposals by London law firm Stikeman Elliot found the bill compares favourably with legislation in these places.
Alongside the Fiduciary Services Act, the Isle of Man Financial Supervision Commission updated its Fiduciary Services Regulatory Codes.
"In amending the draft Fiduciary Services (General Requirements) Regulatory Code and the Fiduciary Service (Clients' Money and Trust Money) Regulatory Code and associated guidance notes, we were particularly aware of the industry's concerns in respect of potential conflict with trust law and that the financial resources requirements should not be too onerous," noted Jane Bates, Head of Authorisations & Companies at the FSC.
"We hope that we have now achieved a good balance and have set standards that will meet the Commission's regulatory imperatives without placing an unreasonable burden on the industry," she added.