The Financial Services Act 1986 in the UK granted the Isle of Man the status of a ‘designated territory’, leading to the Isle of Man Insurance Regulations 1986. As financial services companies rely on investment from foreign nationals, the legislation must remain consistent and relevant to global markets but they have the flexibility to vary this as they feel suitable.
The government, the Tynwald, is claimed to be the longest continually running legislature in the world, dating back to AD979, so few can argue with a claim that the Isle of Man has a stable government.
Ireland can also offer a stable environment and, unlike the Isle of Man, Ireland is part of the European Union (EU) and, as such, is currently subject to some of the same legislation as the UK.
This can be familiar to advisers in the UK, such as the Markets in Financial Instruments Directive (MiFID) and the Solvency II requirements. Some also believe that there is a degree of passportability should the investor move to a new destination within the EU, although this can be a myth in some circumstances as it will depend on which jurisdiction they move to.
If the investor’s objectives are to move abroad then whichever jurisdiction is used for an investment, the investor and adviser would need to establish the tax treatment of the potential solution in the destination which the investor is moving to.
Both jurisdictions provide regulators for financial services providers; the Isle of Man Government through the Isle of Man Financial Services Authority and the Irish Government through the Central Bank of Ireland.
These regulators impose rules around the segregation of assets so that policyholder assets held in the long-term business funds are ring-fenced from shareholder funds.
There are also strict solvency rules in both jurisdictions, with Irish providers being subject to the same Solvency II requirements as UK providers.
In addition to this, both jurisdictions have an ombudsman service that policyholders and advisers can contact if they feel it necessary.
Written by Neil Jones
Neil Jones is Technical Support Manager with Canada Life’s ican Technical Services Team.
Canada Life offers a range of wealth management solutions, including retirement income planning, estate planning and investment solutions from a choice of jurisdictions, including the UK, Isle of Man and Republic of Ireland.