Isle of Man: Business Environment
Banking and Financial Services
Although the number of banks established in the Isle of Man has fallen slightly over recent years, the calibre and scale of banking operations has been showing marked improvement. The Royal Bank of Scotland International, the Royal Bank of Canada, Coutts (Northern European HQ) and Merrill Lynch have all moved to the Isle in the last few years and NatWest has ring-fenced its offshore business by moving to the Island.
In September 2013, there were 30 Class 1 Deposit Taking institutions.
Total deposits at the end of June 2013 were GBP55.18bn, a fall of more than GBP4bn since March 2013, and significantly less than the peak of GBP69.96bn on December 31, 2008.
Some of the recent decreases in the value of deposits can be explained by movements in exchange rates, and the jurisdiction's banking sector has remained in robust health despite the recent financial crisis.
“The global economy has entered one of its worst periods in living memory and the double impact of a banking crisis followed by a global recession which in turn may cause more damage to the banking industry remains a cause for concern. Even with interest rates held at an historic low we are seeing that the cost of credit is still rising. As the recession continues, conditions for businesses will become more difficult as time plays its role. The Isle of Man has nevertheless fared very well so far,” an FSC report observed in 2009.
The Island's banking industry is dominated by subsidiaries or branches of the main UK clearing banks and some foreign banks. The majority of banks in the Isle of Man are engaged in providing private banking services to UK expatriates and to foreign nationals. The services offered often extend beyond deposit taking to establishing and administering trusts and managing the underlying companies and assets held by those trusts, including investment management.
The government announced in July 2001 a 'Financial Services Ombudsman Scheme' which covers complaints about financial advice and products across the range of personal finance such as banking, credit, insurance and investments. As of 1st August 2008 the legislation under which the Financial Services Ombudsman Scheme (the Scheme) is established changed from the Financial Supervision Act 1988 as amended by the Fair Trading (Amendment) Act 2001, to the Financial Services Act 2008.The major modifications to the Scheme resulting from this change are as follows:
- The Adjudicators to the Scheme, including the Senior Adjudicator, will be appointed by the Appointments Commission, previously they were appointed by the Office of Fair Trading.
- If a complaint is submitted for formal determination by an Adjudicator either party, the complainant or financial provider, will have the right to request a review by the Senior Adjudicator of the Adjudicator’s provisional determination. The outcome of any such review will be binding on both parties. The only right of appeal against the final determination being to the High Court on a point of law. Previously, no such right to review any Adjudicator’s determination existed.
The scheme is open to individuals with a financial complaint against an Isle of Man firm that the firm has been unable to resolve.