The Department of Economic Development and representatives from industry gave a positive update to Tynwald Members this week on the performance of the Isle of Man’s Financial and Professional Services sector.
Financial Services remains the most important sector within the local economy but is facing challenges – as well as opportunities – over the next few years.
The Department’s Director of Financial Services John Spellman started off the presentation by outlining the performance of the sector. He said:
‘The financial services sector remains the largest export earning industry both in terms of employment (it provides over 10,000 jobs) and National Income (it represents a third of GDP). Despite the challenging global environment and the ongoing evolution of the financial services industry, employment levels in the Isle of Man have held up well over the past year and overall profits have grown, which points to improving future prospects.
‘However as forecast in Government’s Vision2020 strategy we will need to be agile in terms of confronting significant regulatory and legislative changes so that the Island remains a competitive and trusted jurisdiction to do business with.
‘The speed and extent of regulatory and legislative change is the single biggest issue affecting all International Finance Centres at this time which is why Government has been leading the way in terms of supporting industry through major reforms such as FATCA (The US Foreign Account Tax Compliance Act), the Common Reporting Standard and the impacts of the Vickers Report into the Banking industry.’
Representatives from some of the professional associations were in attendance at the briefing: Mario Ricciardi, Deputy Chair of the Manx Insurance Association; Mark Denton, Chair of the Association of Corporate Service Providers; and Mark Waterhouse, President of the Isle of Man Bankers’ Association.
They each presented their views on some of the opportunities and challenges that the Island faces in the future.
Mario Ricciardi, Deputy Chair of the Manx Insurance Association said:
‘This was a welcome opportunity to meet with Tynwald Members to update them on the challenges and opportunities facing the Life Insurance sector, the Island’s largest employer within Financial Services.
‘The Island has in excess of a quarter of a century of detailed knowledge and experience in the Life Insurance sector and this bodes well for the future, provided Government continues to recognise the importance of providing an environment that investors and business can feel confident doing business in. The Insurance and Pensions Authority has a great track record of listening to the insurance industry. It will be vital that the new combined regulator with the Financial Supervision Commission maintains this proactive approach.’
Mark Waterhouse, President of the Isle of Man Bankers’ Association said:
‘I found the briefing very useful in terms of advising Members of the significant changes that are taking place in the Island’s banking industry at the moment, as well as advising of the need for the Isle of Man to further innovate to take account of banking reforms and the need to remain competitive.
‘Moving forward we will need to be able to develop products and services to suit the needs of a broad range of investors from basic deposit banking up to sophisticated investors with a much greater appetite for risk.’
Mark Denton, Chair of the Association of Corporate Service Providers said:
‘The priority for the Isle of Man has to be the creation of jobs. If we are to persuade people to relocate to the Isle of Man – high net worth individuals as well as businesses – and keep those that are already here, the Island must compete with other jurisdictions and, in the first instance, that means a competitive tax regime for both income and corporation tax.
‘Any changes in these areas must be very carefully thought through as the consequences could be disastrous for the Isle of Man economy. Furthermore, we need to be careful what we put into the public domain as any uncertainty as to whether the Isle of Man is a stable and predictable place to do business, and this also applies to regulatory changes and consultations as well as to tax, is sufficient to deter anyone from moving here.’
The Minister for Economic Development Laurence Skelly MHK said:
‘It is vital that Government and Tynwald hear the needs of business if we are to grow the economy, provide jobs and job security and fund public services. My Department meets regularly with industry leaders and this was an opportunity for Tynwald Members to hear the views of leaders from this vital industry.
‘I heard some clear messages from the industry. Firstly, Government must get better at managing legislative and regulatory change to ensure we support our economy as well as maintain appropriate regulatory standards. I will work with my colleagues in Council of Ministers to ensure we do this in a more coordinated and consultative manner in future.
‘Secondly, in this changing environment, expansion into new areas of the industry will be essential if we are to grow. Therefore it is critical that the newly merged regulator has the policy direction, skills, experience and values needed to help our industry to evolve and prosper. I will ensure Government works closely with the FSC and the IPA to ensure we act together in the Island’s best interests.’
‘Thirdly, we all have a responsibility to promote the Island’s economy. There is currently a disconnect between the confidence of much of the Island’s business community, public confidence and political debate. Government and Tynwald must continue to work to balance Government’s budget.
‘At the same time, we cannot lose our focus on economic growth, nor give the public the misimpression that the economy is not growing. Government’s challenges stem from the changes to the Customs Agreement with the UK in 2008, not our economy, which remains strong, diverse and growing. I am confident that all in our community can benefit from this growth. I hope we can all work together to help build public confidence – which is a vital ingredient in any successful community – over the year ahead.’
