IoM To Change Fund Regulations

by Jason Gorringe, Tax-News.com, London

04 March 2010

The Isle of Man Financial Supervision Commission (FSC) on March 1 launched a new consultation on amendments to Authorised Collective Investment Schemes Regulations, which have been drafted in order to maintain equivalence with the UK Financial Services Authority’s (FSA's) requirements. Equivalence will allow the island to retain its Designated Territory status, allowing the Isle of Man to market Authorised Schemes to the UK public.

The consultation will be of particular interest to managers, fiduciary custodians and trustees of authorised schemes and their advisers.

While the FSC notes that amendments to the UK Authorised Schemes regime have tended to be minimal in recent years, as a result of the European Union UCITS III regime the UK has materially updated its regime for authorised type schemes. The Isle of Man FSC therefore considers that a full review of the entire Authorised Schemes Regime is needed in order to update the regime and to assist in preserving the existing business being undertaken in the jurisdiction.

In order to maintain equivalence, the Regulations have generally adopted most of the UK FSA’s requirements but with amendments to take account of the Island’s Collective Investment Schemes Act 2008. According to the consultation document, of the latest revision, the noteworthy points are:

• As the existing UK requirements are significantly different from the Commission’s current Regulations, there has been a major re-write of the requirements and therefore the FSC has said that it has not been possible to produce a “Road Map” of changes.
• Following informal consultation with existing market participants, it would appear that the view of the industry is that, whilst welcoming any initiative to enhance disclosure of key information to potential investors, the UCITS Simplified Prospectus regime is viewed as being of limited success in achieving its aim of improving investor disclosure. The Committee of European Securities Regulators and the EU Parliament appear to have accepted this by proposing a new regime, the Key Information Document, as part of the package of changes for UCITS IV although this has not been finalised by them. It has therefore been decided to introduce an optional simplified prospectus regime rather than require it in all cases.
• The UK FSA is considering whether to permit Authorised Schemes to be structured as protected cell companies (PCCs). If such arrangements are permitted in the UK, the Commission has said it would be keen to allow this. Therefore, as part of the review, the opportunity has been taken to include reference to PCCs to ensure that, if the UK does decide to extend its legislation, it will be possible to maintain equivalence with them. The Commission will be liaising with the FSA on developments in this area and should they not be progressed, then all references will be removed.

Interested parties must respond to the Isle of Man's proposals by May 7, 2010.

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