News of the shift in the starting date came in the form of an emailed notice to licence-holders from the island’s Financial Supervision Commission, which added that the starting date of 1 February is subject to Council of Ministers and Tynwald approval.
As the Tynwald sits from 21 to 23 January, it is expected that its members will have had a chance to consider the legislation no later than by the close of business on the 23rd, an FSC spokesperson said.
No reason for the month's delay was given.
The Isle of Man's clarification on the start date of its package of regulatory changes affecting advisers also came less than a week after Jersey’s financial regulator published details of how it expects that island's financial advisory industry to comply with changes introduced under its RDR-equivalent, known as the Review of Financial Advice (RFA) scheme.
Guernsey, Jersey's near neighbour and the third of the UK's UK Crown Dependency territories, issued a consultation paper on its proposed "Financial Advice Standards" (GFAS) back in September, with a closing date of 8 November. That island's advisory industry now awaits publication of the consultation paper's findings, with the understanding that any changes ultimately recommended will take effect from 1 January 2015.
Broadly similar to UK's RDR
The Isle of Man’s Retail Distribution Review, or RDR, is broadly similar to that of its G20 neighbour across the Irish Sea, except in the area of commissions. These are banned under the UK’s RDR regulations, which took effect at the beginning of 2013, but, says Claire Whitelegg, deputy director of funds and investment services for the IoM’s FSC, there are no current plans to ban adviser remuneration via commission on the Isle of Man.
“[The Isle of Man regime] draws from the UK RDR approach, but is designed to meet the needs of the Manx marketplace and the Manx system,” she explained.
“[The] Manx RDR is not a mirror of the UK regime.”
Like the UK’s RDR, though, anyone providing financial advice to retail investors on the Isle of Man from the first of February must demonstrate “a relevant Level 4 standard of competence”, according to Whitelegg.
Advisers may do this through a UK RDR route, or through the so-called “Isle of Man Alternative Assessment”, which Whitelegg noted was developed specifically with senior professionals on the Isle of Man in mind by the Chartered Institute for Securities and Investments (CISI), one of the advisory industry’s main accreditation bodies.
Other key features of the Isle of Man’s RDR:
- Advisers on the Isle of Man are already required to undertake, and provide documentation of, relevant continuing professional development. But from 1 January 2015, it is expected that they will need to hold an Isle of Man equivalent to the UK Statements of Professional Standing
- The Financial Services Rule Book has been reviewed to ensure that the disclosure requirements it mandates provide adequate transparency about advisers’ status, and the nature of services. Any changes to this Rule Book will take effect at the beginning of 2014, Whitelegg said
Monitoring Progress
The Isle of Man FSC has been monitoring the progress of individual financial advisers on the island in the lead-up to the Manx RDR implementation date in early 2014. The FSC has said it expects more than 92% of the island's advisers will be fully qualified by that date.
With respect to commissions, Whitelegg said the FSC decided against banning them, even though this has been the approach not just in the UK but elsewhere in Europe. (Not, though, in Singapore, which is in the process of overhauling its advisory industry regulations, but, as reported, decided against banning commission, although the regulator there has reserved the right to consider a ban at a later date.)
The reason, she explained, was because of concerns that in a small market like the Isle of Man’s, “regulation of this nature could skew the range of products available to clients, and potentially make financial advice beyond the means of some small investors”.
“The FSC is not mandating how remuneration is made, but is continuing to require clear disclosure of remuneration to investors, so that they can make an informed choice,” Whitelegg continued, adding that the commission planned to continue to monitor this area in its supervisory work with licenceholders.
Whitelegg said ensuring advisers be able to demonstrate competence, and “positively demonstrate the suitability of recommendations” they make for each client according to these clients’ needs, remain the FSC’s central concern, even though “this does not always equate to the cheapest available option”.
“In developing [our] regime, the FSC has taken account of the local market place and international developments,” Whitelegg said.
“The resulting Manx RDR regime is intended to be a balanced approach to the issues that retail advice presents.”
To read and download an October, 2012 outline of the Manx RDR, and how it compares with the UK’s, click here. To read a November 2012 profile of the Isle of Man, in which chief executive of the IoM's Financial Supervision Commission, John Aspden, discusses the regulator's approach to advice-giving on the island, click here.
