Authority updating its supervisory approach

The Isle of Man Financial Services Authority is progressing plans to update the way it supervises regulated entities and designated businesses.

Internal restructuring is currently taking place at the financial regulator to support the implementation of an enhanced risk-based supervisory framework.

Bettina Roth, the Authority’s Chief Executive Officer, outlined the changes during today’s (Friday 3 February 2023) Manx State of the Nation conference at the Comis Hotel.

The intention is to focus the Authority’s resources on the risks that pose the biggest threat to its regulatory objectives of protecting consumers, reducing financial crime, and maintaining confidence in the Island’s financial services sector.

The revised supervisory methodology has been in development for some time, with the project highlighted as a priority in the Authority’s Strategic Plan and Annual Report.

As part of the proposals, the Authority will retain four supervisory divisions, but transition from a predominantly sector-based approach to one that places an even greater emphasis on impact and risk. The new divisions will be:

• HMI and Enhanced Supervision – covering all regulated entities (except banks and insurers) which are rated as high or medium impact, together with the development of an enhanced supervision unit [1]. Ron Dicks will head this division.
• Portfolio Supervision – covering all regulated entities (except banks and insurers) which are rated as low impact, along with the authorisations of new regulated entities, designated businesses, and individuals. The Authority is currently recruiting for a Head of Portfolio Supervision.
• Prudential Supervision – covering all banks and insurers. Insurance authorisations will remain with the insurance teams. Andrew Kermode will head this division.
• Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Supervision – covering AML/CFT supervision and oversight of all regulated entities and designated businesses, AML/CFT policy, and the Authority’s oversight obligations under the Beneficial Ownership Act 2017. Ian Spence will head this division.

Work is being progressed on a phased basis and the Authority will share further information in the near future about the changes and what they will mean for all firms. This will include a timeline of key milestones, an explanation of the impact and risk considerations, and the publication of an updated supervisory engagement model.

Mrs Roth said: ‘The updated supervisory methodology starts with the premise that not all firms are equal. As a modern regulator, we believe we can deliver most value by focusing our energies on the most significant firms and the greatest potential impacts on the Island’s financial system.’

She added: ‘The changes will maximise the effectiveness of our resources and result in a more structured and consistent approach to supervision, ensuring that risks are analysed using a common framework. Going forward, it will mean that our engagement with firms is more proportionate to their size, complexity, and the types of regulated activities conducted.’

[1] The enhanced supervision unit may take on remediation cases from all supervision divisions.