Officials in the Isle of Man explain to this publication ideas on how to spread the jurisdiction's message more powerfully than in the past.

International financial centres constantly battle to market themselves globally, and the Isle of Man wants to emulate the perceived success of Jersey's financial agency by building an organisation of its own.

The Department of Enterprise on the Isle of Man has created a similar agency to that of Jersey Finance. It is called Finance Isle of Man, a public and private partnership that takes decisions and feeds ideas into how to make the jurisdiction more prosperous. The agency, which is made up of banking, fiduciary, pensions, insurance, funds and wealth and professional services, is not a separate legal entity but will instead operate using delegated powers from the Minister for Enterprise.

With international finance centres (IFCs) in Europe such as the Isle of Man, Jersey, Guernsey, Malta, Gibraltar and Switzerland eyeing the impact of Brexit and other international shifts, the stakes for getting the right infrastructure in place are arguably as high as they have ever been. IFCs are often seen touting their jurisdictions' wares across the globe, such as in Asia and the Middle East.

Prior to the Islexpo 2018 attended by this publication recently, WealthBriefing interviewed Simon Pickering, head of financial services at the Isle of Man’s Department of Economic Development, about the new agency and how the Isle of Man competes, and how perceptions of the island are changing.

“We have set up a new agency system on the island to promote our areas,” said Pickering. “With these agencies, we are making it quite clear that we are stable as an island, have great products and a highly cooperative sector. The new finance agency formalises the public/private cooperation. The real sea of change is the new advisory board, which will be made up of private sector, professional, and experienced people from the different sectors of the financial services segment. And that board has been tasked with policy, product and promotion.” 

Pickering continued: “The big change will be that the industry will make the calls to improve the sector rather than it was before, where the government made the decisions. It will be that private sector experience that will be steering the boat as of next month. It has worked well for Jersey Finance, and we are tentatively following in their footsteps. I’m sure there will be teething problems, but it has had good feedback from the financial services industry.”

This publication also spoke to Gill Marples, director at IntegraLife International and chair of the Manx Insurance Association, to discuss the new finance agency system and whether Brexit forced the Isle of Man to act.

“I think all of us hope the new structure will improve things,” said Marples. “You have to believe that it will bring change. You hope that it will join the dots a bit. If something is going on in one sector, we realise it could impact another sector. Maybe we haven’t been as good at that in the past, and that has been recognised, and this is a way of beginning to move forward together. It’s not just the industry that has to work together to promote the Isle of Man, the whole of the island has to help lose the tax haven tag and what goes on here. Brexit concentrated minds. I think this agency structure would have happened anyway. I think Brexit concentrated everybody’s minds on the external threats that can come along and the fact that we are linked to the UK’s fortunes. I think [there are] inthelligent conversations about the Brexit impact and where we can make it help us, and where we don’t want to follow the UK.”

In May, this publication reported that the Isle of Man Department for Enterprise had appointed Aidan Doherty as non-executive chair and Michael Crowe as chief executive to lead the Finance Isle of Man Executive Agency. Doherty has over 40 years' experience in the sector. Crowe is director at Grant Thornton. He has spent 27 years working on the Island.

Differing from other IFCs
The Isle of Man has competition with other international finance centres including Jersey and Guernsey (they are all Crown Dependencies) to become the offshore hub for the UK. However, it seems that Jersey has pulled out in front of the other IFCs, and the Isle of Man need to find a way to bridge the gap.

In December 2017, Jersey Finance reported that the net asset value of regulated funds under administration increased by £26 billion ($35 billion) to £291.1 billion during Q4 2017. Also, it logged that the total value of banking deposits held in Jersey increased by £6.5 billion to £118 billion. In 2012, EY reported that the Isle of Man’s financial sector was worth £1.1 billion.

Pickering spoke about the relationship the island has with other offshore finance centres, and how it tries to compete.

“Although we are rivals with Jersey and Guernsey, we are friendly rivals,” Pickering said. “We do collaborate in a number of areas with the UK government. We do come up with initiatives to try and make sure we are not stagnant. The alternative banking regime will be one of those where we have come out with two new banking licenses. We should be about to name a big bank [coming] to the area soon – so this a big differentiator. We are the first international finance centre to regulate crowdfunding. We have the enterprise development scheme, which is the £50 million managed by Spark, that has delivered on around 12 investments. Another [initiative] we are looking at now is an independent paper on blockchain technology, digital currencies and ICOs to see if there are any opportunities with those sectors and financial sectors.”

The government official also discussed the island’s fund industry and what it was offering high net worth and ultra-high net worth individuals.

“We have one clear USP on the funds side, which we plan to promote much more this year. It is the Exempt Fund, which is not fully regulated. It was designed to be a family and friends fund with a maximum of 50 investors. It was meant for high net worth and ultra-high net worth individuals to give some family money to university graduates so as to keep them going in education. It is an interesting fund, and one we feel needs more promotion. It has a very low start cost and there are enough professional support people that can help set it up and help out.”

Pickering added: “The other thing that we need to get over on the funds side is that even if Cayman Islands or BVI are your domicile of choice, you can still get the fund administered in the Isle of Man, at a low cost in GMT. Sadly BVI suffered some bad storms recently, but you are in a safe jurisdiction to get your funds administered here. This is something we have to push in the next year."