The global financial and professional services industry has undergone unprecedented change in the last couple of years. From technological disruption to new regulatory frameworks and increased media scrutiny to issues with attracting and retaining talent, there are numerous challenges and opportunities for the sector worldwide.
Amid this period of transformation and uncertainty, firms will be looking towards international financial centres that can help them navigate this environment, so they can overcome challenges and maximise the opportunities.
The Isle of Man is a self-governing UK Crown Dependency and continues to have very strong ties to the UK. Located between the United Kingdom and Ireland in the Irish Sea, the Island has the lowest crime rates in the British Isles and is politically stable with an extremely low risk to geopolitical threat. The Island has the oldest continuous parliament in the world at over 1,000 years old, the oldest common law trust regime, and has fast become a popular jurisdiction for private and family office relocation due to its common-law jurisdiction and company law, which is based on UK principles.
The Isle of Man has a long tradition in financial services, with over 40 years of innovation and regulation, and a diverse sector employing over 12,000 people and encompassing banking, insurance, fiduciaries, funds and wealth management and pensions. Home to more than 400 financial service companies, several of the world’s most respected financial services brands are headquartered on the Island; financial services account for over 40 per cent of the Island’s total GDP. As a result of its long-established financial services sector, the Island has a comprehensive infrastructure of private service providers and professional services.
Internationally Connected and Respected
The Isle of Man is extremely well connected to the world, with a digital infrastructure, legislative programme, and network of experienced service providers all built towards an outward looking and progressive global business environment. It is this holistic offering that makes the Island the natural choice for international businesses and has seen it maintain growth and success over a number of years.
The Isle of Man is an outward-looking country, at the forefront of best international practice. It has a modern regulatory system aligned to global standards in tax compliance and transparency and its regulatory jurisdiction is supervised by the Isle of Man Financial Services Authority (FSA), a proven, pragmatic and responsive regulator.
The Island is renowned for its long-standing policy of positive engagement with international standards and in addition to being a Finance Centre of Excellence, the jurisdiction is both recognised and endorsed by a number of independent regulatory bodies and international groups.
As an independent nation, the Isle of Man has the autonomy to develop legislations and policy quickly and in response to business needs. This also allows the Government to take a bespoke approach that other jurisdictions may not be able to provide. For example, earlier this year the Conduct of Business Code was introduced for life insurance and wealth management companies on the Island, ensuring greater transparency for customers and further enhancing their protection, while demonstrating that financial services firms on the Island are committed to raising the bar for international best practice.
Ability To Innovate
The Island’s financial and professional services industry’s continued growth can be attributed to its ability to innovate. A good example of this was the introduction of the Alternative Banking Regime (ABR) which provides two additional types of banking licences. The ABR has been designed to attract banking operations to the Island, particularly private banks, foreign bank branches and representative offices. In July 2018, Investec Bank (Channel Islands) was granted the first ABR licence and this year has seen CIB Limited, part of the Capital International group, awarded a provisional Class 1 (2) banking licence issued under ABR. There is also an opportunity for technology based or other financial services businesses to explore a natural progression into the provision of banking services.
The Isle of Man has a long history as an international respected ‘digital hub’ for businesses operating in the sectors such as eGaming and ICT, and more recently fintech and enterprises utilising emerging technologies. Last year, Digital Isle of Man, an Executive Government Agency, was created to support the Island’s digital sectors by developing and implementing a strategy for sustainable economic growth. Earlier this year, the Digital Agency launched Blockchain Isle of Man and its associated Sandbox; an important initiative which support businesses using blockchain technology through their business and regulatory stages. The Sandbox provides a collaborative space for businesses to live-test their product, service or delivery mechanism where they are supported by the Blockchain Isle of Man team who provide expertise, guidance and marketing support. Ultimately, the Sandbox will facilitate and encourage collaboration between companies.
On a more detailed level, in 2018, we released a national telecommunications strategy, outlining the provision of a world-class telecommunications infrastructure; an essential business requirement. We are also developing new products and exploring new ways to support business and encourage further innovation, such as providing regulatory testing environments for ‘tech trials’ which has recently included looking at areas such as air pollution and autonomous vehicles.
Diversity and positive company culture are now commercial imperatives for financial services firms. In fact, senior regulators globally have emphasised the necessity of establishing the right culture within financial services firms. The last census carried out on the Island in 2016 showed women across the finance sector were 55 per cent of the total workforce, which is in line with the rest of the world. However, of all the women employed in finance roles on the Island, approximately 45 per cent were employed in a senior role in 2016, which is much higher than the global average of 25 per cent.
The Isle of Man is an international financial centre with a vibrant culture which fosters diversity and equal opportunities. There are various local trade bodies which promote excellence within the sector and the Island has a number of organisations that offer professional qualification training programmes in areas such as banking, accountancy and law, ensuring talent is promoted and nurtured at every level. For example, 1 in 3 young professionals on the Island were promoted in the last year.
Implications of Brexit
A guiding 'principle' of the Brexit negotiations published by the EU clearly states that 'nothing is agreed until everything is agreed'. Therefore, there is still a big question mark over the exact ramifications on the global financial services industry, which is a concern for businesses.
The Isle of Man Government has been actively engaging with key politicians and senior officials in Westminster and Brussels to ensure the Island’s position is understood and defended. We expect our financial services industry to remain largely insulated from the effects of Brexit as the EU is not a significant market for the Isle of Man.
Family and Private Office Offering
The Isle of Man’s long-standing success in providing specialist wealth management and fiduciary services to international high net worth individuals and families is based on our three cornerstones: strength, security and stability. At the forefront of our strengths is the sustainability that has supported the Isle of Man for over 1,000 years of constitutional autonomy. We were also one of the first jurisdictions to regulate trust and corporate service providers back in 2000.
The Island benefits from a sophisticated and experienced network of fiduciary, funds and wealth management experts which, for many years, have enabled family and private offices to flourish; it is no coincidence the Isle of Man is home to some of the world’s leading private wealth offices. Both our legal and regulatory stability allows us to provide the most supportive global environment and ecosystem to service private capital and wealth.
Every family and private office is different, and the Island has many well established single and multi-family offices, offering a whole range of services from concierge, administration and advisory to wealth management and succession planning, through to property management, marine and aviation asset management.
In 2018, the Finance Isle of Man Executive Agency was created and tasked with collaborating with local industry to understand and best represent the needs of the Isle of Man’s finance sector. The Executive Agency is a private-public partnership which looks to promote and develop the Isle of Man’s significant financial and professional services industry and ensure its recognition as an international financial centre of excellence, in turn delivering long term sustainable economic growth to the Island.
The Agency has had a number of initiatives in the last year, including launching a global marketing campaign in partnership with the Manx Insurance Association, a local trade body representing a number of life companies on Island. The campaign showcased the Isle of Man as a robust international financial centre to over one million people worldwide.
In addition to being shortlisted for three industry awards, we have taken a number of targeted trips across key jurisdictions including Asia, South Africa, and Dubai, promoting propositions such as Family Office and private wealth management, life insurance, international pensions, asset protection and succession planning. Our on-Island work is of equal importance. The Agency team are continually engaging with key stakeholders and industry trade bodies to support the sector, ensuring appropriate collective thought and input on relevant legislation and regulatory matters. We also work hand in hand with other government entities such as Locate Isle of Man, working on specific recruitment initiatives for our sectors.
As businesses transform, they will be drawn to international financial centres which have innovative frameworks in place already and can therefore help them maximise opportunities. With a robust regulatory framework, long standing heritage, and politically and economically stable environment, the Isle of Man remains confident and optimistic for the future.
Michael Crowe is CEO of Finance Isle of Man. He is also a fellow of the Institute of Chartered Accountants in England and Wales.