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Isle of Man Financial Regulator Revamps Supervisory Approach

The Isle of Man Financial Services Authority (FSA) is moving forward with plans to update its supervisory approach for regulated entities and designated businesses. The financial regulator is currently undergoing internal restructuring to support the implementation of an enhanced risk-based supervisory framework.

During the Manx State of the Nation conference held at the Comis Hotel on February 3, 2023, the FSA’s CEO, Bettina Roth, detailed the upcoming changes. The aim is to concentrate resources on the most significant risks to the regulator’s objectives, which include protecting consumers, reducing financial crime, and maintaining confidence in the island’s financial services sector.

The revised supervisory methodology has been in development for a while and was highlighted as a priority in the FSA’s Strategic Plan and Annual Report. The Authority plans to maintain four supervisory divisions while transitioning from a primarily sector-based approach to one that emphasises impact and risk more heavily.

The new divisions are as follows:

(1) HMI and Enhanced Supervision – led by Ron Dicks, covering all regulated entities (except banks and insurers) rated as high or medium impact, along with the development of an enhanced supervision unit.

(2) Portfolio Supervision – covering all regulated entities (except banks and insurers) rated as low impact, as well as authorisations of new regulated entities, designated businesses, and individuals. The Authority is currently seeking a Head of Portfolio Supervision.

(3) Prudential Supervision – headed by Andrew Kermode, focusing on banks and insurers, with insurance authorisations remaining with insurance teams.

(4) Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) Supervision – led by Ian Spence, overseeing AML/CFT supervision of all regulated entities and designated businesses, AML/CFT policy, and the Authority’s obligations under the Beneficial Ownership Act 2017.

The FSA will provide more details about the changes and their implications for firms in the coming weeks, including key milestones, impact and risk considerations, and an updated supervisory engagement model.

Mrs. Roth explained that the updated methodology starts from the notion that not all firms are equal. By focusing on the most significant firms and potential impacts, the regulator can deliver the most value. She added that the changes would maximise the effectiveness of the FSA’s resources and result in a more structured and consistent approach to supervision, with risks analysed using a common framework. This will lead to more proportionate engagement with firms based on their size, complexity, and regulated activities.

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