Offshore Banking and Trusts
Isle of Man Banking
The Edwards Report, (a review of Financial Centres), states that the Isle of Man is "in the top division of offshore centres".
Protection of investors is provided by the Manx government's Banking Business (Compensation of Depositors' Funds) Regulations.
Funds: The Financial Supervision Act 1988 - which came into operation on 1 November 1988 - contains the statutory framework for regulating collective investment schemes in the Isle of Man. Regulations introduced by the Financial Supervision Commission, (FSC), under this legislation to regulate and supervise mutual funds and fund management companies led to the island becoming the first offshore territory to be granted 'Designated Territory Status' by the UK government in 1988.
Financial and investor protection legislation is covered by the Companies Acts 1931 - 33, the Prevention of Fraud (Investments) Act 1968, the Banking Acts 1975 - 86, the Financial Supervision Act 1988 and the Investment Business Act 1991-93.
Each authorised scheme must have a manager and a trustee who are independent of each other and have a base on the island. The manager is required to hold a Business Licence, while the trustee must be a licensed banking institution. Every manager and trustee of an authorised scheme must join the statutory compensation arrangements that compensate investors if a manager or trustee cannot meet claims over any civil liability incurred in connection with their business.
Life: The Isle of Man's Life Assurance (Compensation of Policyholders) Regulations 1991 ensure that, if one of the life assurance companies fails to meet its liability to it's policyholders, up to 90 per cent of the liability to the protected policyholder will be met.
Trusts: The Isle of Man trust laws are similar to those in the UK. The courts will generally follow the principles of equity applied in the UK, apart from when they conflict with established local precedent. The principal enactment governing trust law in the Isle of Man is the Trustee Act 1961, which enables trustees to advance capital to beneficiaries up to one half of their expected entitlement and to provide income to infant beneficiaries for their maintenance, education and benefit. Unlike the UK, under Manx law there is no stipulated period for accumulating income.
Guernsey Banking
Funds: Guernsey has a strong regulatory structure, and has received a commendation from the UK Home Office in the world renowned Edwards Report, (a review of Financial Centres). It is mainly because the island will only let in the most proficient managers who can prove they will only add to the island's reputation. All funds set up in Guernsey must be authorised under the Protection of Investors (Bailiwick of Guernsey) Law 1987. Once authorisation has been granted, Guernsey's Financial Services Commission, (FSC), continues to monitor and supervise all authorised schemes.
Every quarter, fund managers must submit statistical returns and each year they must also submit a report and audited accounts to the FSC. If those carrying out funds related business do not comply with these requirements, they can lose their licence. This may appear quite burdensome, however, being authorised to domicile an investment scheme in Guernsey is meant to be solid proof of a reputable fund.
Life: Guernsey's Financial Services Commission, (FSC), has a regulatory regime for insurance which has now brought intermediaries and financial advisers under its remit, giving clients increased confidence that this is a centre which seeks to maintain the highest standards. All insurance business in the island is subject to the Insurance Business Law (1986).
If the regulatory standards within the island are not enough to convince an offshore investor that their assets will be safe, Guernsey has also been praised for its' high standards of business by the UK Home Office. It has also been granted 'Designated Territory Status' by the UK Financial Services Authority.
Trusts: Guernsey Financial Services Commission has not only been working away at anti-money laundering legislation and protection of investors, it is also proposing a regulatory framework for fiduciary business. Trusts registered in Guernsey are under the jurisdiction of the Royal Court of Guernsey and in cases where the island's trust law does not provide sufficient direction, then English law is referred to.
Jersey Banking.
Jersey has put legislation in place governing its entire financial services industry. It expects other centres will have to improve their own standards and believes a well-regulated environment is something that offshore centres can use as a marketing tool.
Funds: The success of this centre is attributed to the ability of its institutions to provide City of London expertise, combined with an external perspective on what is going on in the big financial centres.
On the regulatory front, Jersey's Financial Services Commission, (FSC), is developing a legislative framework covering all areas of financial services business and is also reforming its financial services commission. This will shortly become politically independent and will also have an enforcement division, providing further confidence in the island's reputation.
Trusts: Jersey offers trusts and corporate services in a well regulated, acclaimed offshore environment.
(Source: Financial Times, Offshore Centres).
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