Accountability & Corporate Governance
The Board of the Financial Supervision Commission
The Financial Supervision Commission is a Statutory Board. The role and responsibilities of a Statutory Board and its members are set out in the Statutory Boards Act 1987 (except where this Act is varied by the Financial Services Act 2008) and in Council of Ministers guidance. Appointments to the Board of Commissioners are approved by Tynwald.
The Board of the Financial Supervision Commission consists of not less than seven qualified people appointed by Treasury and approved by Tynwald. The Board currently comprises a Non-Executive Chairman and Non-Executive Deputy Chairman, the Chief Executive and a further four Non-Executive Commissioners. The quorum of the Board is three Commissioners.
Commissioners normally go out of office five years after appointment and their remuneration is set down by Order.
Routine meetings of the Board are held monthly, generally on the last Thursday of a calendar month and additionally on an ad hoc basis as required. Quorums of the Board also meet as necessary to: hear licence applications; review risk and internal control matters (RICC); agree staff remuneration; determine appeals relating to complaints; and hold licenceholder disciplinary reviews.
The constitution of the Commission and its functions are described in Schedule 1 to the Financial Services Act 2008. This Act provides that the Treasury may specify policies and strategies for the Commission and the Commission must, so far as is reasonably practicable, act in a way which promotes any policy or strategy specified by the Treasury. The Commission’s Board members are responsible to the Treasury for the proper operation of the Commission and its compliance with the requirements of the Financial Services Act.
As a regulator the Commission is subject to challenge in carrying out its functions, and is financed out of public funds. These factors impose a strong responsibility on the Commission to demonstrate that it is acting properly at all times, in the same way that the Commission expects a similar behaviour from its licenceholders.
The Commission operates under a Corporate Governance Framework which incorporates the requirements of the Isle of Man Government Corporate Governance Principles and Code of Conduct. The Commission reports annually on its compliance with the Government’s Code of Conduct, in the form of a Statement of Internal Control signed by the Chief Executive and submitted to the Chief Financial Officer.
Memorandum of Understanding
The Isle of Man Treasury and the Financial Supervision Commission are parties to a Memorandum of Understanding. It sets out the framework for co-operation between the Treasury and the Commission. In particular, it establishes arrangements to ensure that the Commission is accountable to Treasury for its actions, and clarifies the circumstances in which liaison and dialogue can flow between both parties.
Link to Terms of reference for the Risk and Internal Control Committee (RICC).
Accountability and scrutiny
The Commission is accountable and subject to scrutiny in the following areas:
- Tynwald: appointment of Commissioners, Corporate Plan, new legislation;
- Government and Treasury: strategic objectives, legislative policy and proposals, budgeting and funding, establishment headcount;
- Industry: consultation on regulatory and supervisory proposals;
- Home regulators of licensed institutions.
The Commission’s regulatory and supervisory approach is also subject to ongoing review by standard-setting organisations including the International Monetary Fund and the FATF. The Island’s designated territory status (which effectively permits the distribution of Isle of Man authorised funds within the UK) is also subject to ongoing review by HM Treasury in the UK.
The Commission endorses the principles of openness and transparency contained in the Code of Practice on Access to Government Information and, in fulfilling its functions, the Commission endeavours to be as open and transparent as possible without compromising confidentiality.
The Commission operates within a budget agreed with Treasury, and within a headcount restriction set down centrally within Government. The Commission’s revenue and expenditure is audited annually by the Government’s external auditors, and the Commission is subject to review by the Government’s internal audit department.
The Commission publishes its financial statements each year as part of its Annual Report.
The Board has put in place a delegation of responsibility framework within the Commission’s management system. This framework identifies the persons responsible for developing and exercising control procedures and for promoting a compliance culture within the Commission.
The powers delegated to the Chief Executive include:-
- Changes in licence conditions attached to a licence
- Extensions to licences to include new schemes etc
- Surrender of lapsed licences
- Restructure of organisations and sale or merger of licenceholders
- Approving recognition of collective investment schemes
The Chief Executive in turn delegates certain matters within the Executive.