The Isle of Man Financial Services Authority (IoMFSA) issued a draft guidance note, ‘The Governance of Collective Investment Schemes’ which calls for “essential open dialogue with stakeholders” to enable it to develop the outline proposals, inviting comments by 14 July.
The move by the regulator follows a spate of Isle of Man domiciled collapsed funds, including New Earth Recycling and Renewable (NERR), part of the New Earth Group of Funds, for which Isle of Man taxpayers will now ultimately have to foot the winding up bill.
Two key objectives of the guidance notes are to secure an appropriate degree of protection for policyholders and the maintenance of confidence in the Island’s financial services, insurance and pensions industries through effective regulation.
It said the failure of an Isle of Man domiciled fund due to “malfeasance or negligence on the part of the governing body, poses a reputational risk to the island as an international financial centre”.
The regulator said the principles and recommendations in the guidance note would give a framework for effective governance “thereby reducing the risk of such failures”.
The guidance includes potential actions such as the issuing of warning notices to a member of a governing body and prohibitions from being a member of such a body.
Integrity considerations in the guidance are also spotlighted including:
- criminal convictions, in particular any offence involving dishonesty or breach of securities legislation, in any part of the world;
- unsatisfied court judgments;
- disqualification from acting as, or undertaking not to act as a company officer (even if the period of disqualification or undertaking has ended);
- regulatory sanctions against the individual or an entity to which they were appointed; and
- disqualification or suspension from a profession, or any sanction imposed by a professional body for breach of obligations as a member of that profession
A feedback statement will be issued within three months of the closing of the discussion period, the IoMFSA said.
