Consolidation and Review of Financial Services

Legislation(“CAROL”)

Jane D N BatesHead of Policy and Legal Unit

Financial Supervision Commission

21st March 2006

Objectives

Consolidate FSC legislation into one Act and -

Modernise the regulatory framework

Review FSC mandate & remit– Opportunities and Risks – Joined-up Regulation

Benchmark against other jurisdictions

Benefits

Streamlined & up to date framework which is:– Easy to use & understand– Less bureaucratic

Enhanced international respect through: – Taking account of international standards– Facilitating appropriate international

cooperation (MOUs)

Benefits (2)

Appropriate effective consistent regulation, which:– Underpins the “Can Do Economy”– Supports existing business streams

(market access)– Creates new opportunities for quality

business

The First Stage

Consultation Paper issued 6 March 2006Published on our website (www.fsc.gov.im/library)Shape of proposed legislative frameworkThe Commission’s remit and accountabilitiesProposed changes to existing regulatory legislationInteractive questions: e- responses encouragedComments by 28 April 2006 please

Proposed new framework

One Financial Services ActOne Regulated Activities Order- detailing all the activities to be regulated and relevant exclusions (i.e. activities outside the scope of the Act)Exemption Regulations

Proposed new framework (2)

One Combined Regulatory Code (or Rulebook) which has sections covering the various topics e.g. Conduct of Business, Financial Resources etc.An improved user-friendly, on-line Handbook

The Wider Picture

Overriding Government Regulatory StrategyCreating and implementing the Regulatory FrameworkFSC RemitFSC Accountability

Proposals for an Overriding Government

Regulatory StrategyIOM committed to level playing field IOM will adhere to principles of regulation accepted in leading international financial centres IOM will take cognisance of aspirational standards of standard-setting bodies

Creation and Implementation of the Regulatory FrameworkTynwald

Scrutiny and approval of the legislation

Treasury/Government Changes to Overriding Government Regulatory Strategy Proposals for policy changesConsideration and approval of detailed policy propositions

Creation and Implementation of the

Regulatory Framework (2)FSC

Initiation and development of policy propositionsConsultation with industry and Treasury Formulating rules (Legislation and Guidance)Implementation of policy and legislation

 

Creation and Implementation of the

Regulatory Framework (3)Industry

Suggestions for policy changeAdvice on potential or proposed changes – existing fora and Industry Advisory GroupComment upon policy propositionsContribute to the detailed assessment of proposals and the practical impact of implementation

The FSC’s Remit

Clarification of the FSC’s Remit

The FSC seeks a formal, statutory remit to

Provide a clear transparent statement of its roleProperly empower it to carry out all aspects of that roleFacilitate effective regulation whilst safeguarding the rights of licenceholders and the publicAssist understanding of what the Commission can do – and what it cannot!

FSC’s Accountability

Operational Independence – Setting objectives & responsibilities– Conduct of licensing & supervision

Improved accountability mechanisms– Reporting & Audit– Corporate Governance– Communication with Government &

Tynwald

CAROL Legislative Liaison Group

Representatives from Industry Associations and Professional BodiesRole

Discuss proposals (pre consultation)Feedback to their organisationsSeek comments on specific issuesHelp to consider consultation responses

Proposed regulatory changes

Regulated Activities, Exclusions and Exemptions to be reviewed

New areas – e-money and e-environment

Update of existing areas – e.g. Definition of Banking Business, Funds etc

Generally issues that are already identified

Proposed regulatory changes (2)

Conduct of Business and related matters

Treating Customers Fairly

Impact of MiFID

Review Enforcement /Disciplinary Powers

Summary of proposed changes in consultation document

Consultation TimetableShape of framework and FSC

Current

Regulated Activities & Exemptions

Q2 2006

Draft Financial Services Bill Q3 2006

Client Money/ Assets & Custody

Q3 2006

Conduct of Business & Advertising

Q4 2006

Financial Resources, Audit & General Requirements

Q4 2006

Ancillary Matters, Fees and Forms

2007

Any Questions?