Compensation Scheme – investors in authorised collective investment schemes
Isle of Man’s Authorised Collective Investment Schemes’ Compensation Scheme ("ACISCS")
The Isle of Man also has a scheme to compensate investors in authorised collective investment schemes ("authorised schemes"). A summary of the cover provided by the ACISCS is as follows:
The ACISCS partially compensates you if the manager of an authorised scheme in which you have invested fails, and is unable to pay you when money is due to you according to the terms of the authorised scheme.
The ACISCS does not protect investors against the failure of an authorised scheme. However, it may provide compensation if the company that manages that authorised scheme defaults in its obligations to investors.
There is no time limit for payment of compensation and it may take many years for full payment to be made.
Compensation payable is as follows: 100% of the first £ 30,000 90% of the next £ 20,000 with a MAXIMUM Compensation of £48,000.
Compensation is paid out of levies collected from ‘authorised persons’ in the Isle of Man. There is no "standing fund" of compensation (i.e. money is not collected in advance). Therefore, you may have to wait some time for compensation to be paid, particularly if you have invested in a large scheme as there could be many people seeking compensation.
'Authorised person' is defined in legislation and covers all authorised scheme managers, trustees and fiduciary custodians that are located in the Isle of Man. Authorised persons are FSA licenceholders that hold Class 3(1), (3) or (4) permissions relating to services to authorised schemes. However, some firms outside the Isle of Man are permitted to provide trustee/ fiduciary custodian services to authorised schemes, although such firms are not participants in the ACISCS and will not contribute levies towards the ACISCS.
The legislation for the Isle of Man’s ACISCS can be found on the FSA’s website.