IoM Updates Guidance For Trust Services Providers
Friday, March 8, 2013
The Isle of Man's Financial Supervision Commission has issued new draft guidance on the expected practice of Trust
Service Providers (TSPs) to strengthen existing guidelines in place since October
The guidance reminds licenseholders of their obligations in respect of their
conduct when acting as trustees, trust administrators and protectors of trusts; and discusses
enforcement tools at the Commission's disposal.
The Commission explained that it intends to strengthen the guidance as trust
deeds often contain wide powers for the trustees and wide indemnities. Furthermore
potential beneficiaries of discretionary trusts have limited rights to obtain
information. It is possible that a trustee could engage in a course of conduct
which is not a breach of the terms of the trust deed and is covered by an indemnity
in the trust deed, but which nonetheless falls short of the General Licensing
Policy and Rule Book requirements for competence and integrity.
This, the Commission pointed out, emphasizes the need for: High standards of professionalism in the industry; Rigorous internal checks and scrutiny within TSPs; and protectors of trusts to be independent of the trustee and unconflicted.
The latest guidance in particular seeks to strengthen the following provisions:
- 6.2 Skill, care and diligence: The requirement to use skill, care and diligence
including activities in connection with the formation, drafting, governance
and administration of a trust.
- 6.6 Action likely to bring the island into disrepute: This includes conduct
which is exploitative, or not clearly in the interests of beneficiaries, or
which could damage the reputation of the Isle of Man.
- 6.7 Integrity & fair dealing: This rule applies to the carrying on
of all regulated activities, and includes dealing fairly with clients in an
- 6.8 Informed decisions: This rule includes a requirement to avoid misleading
or deceptive representations or practices and applies to the information provided
to settlors, protectors and other influential parties about the nature of
services provided and about the costs and benefits of trustee decisions.
- 8.4 Management controls: This rule includes the requirement to ensure systems
and controls are in place to ensure fair treatment of clients and would include
controls over the use of trust assets and monies.
- 8.6 Risk management: This rule includes the requirement to manage the risks
applicable to the licenseholder.
- 8.19 Functions of compliance officer: This rule includes the requirement
to have robust and documented arrangements for compliance and to monitor the
operational arrangements - which should include operational arrangements for
making and recording trustees’ decisions, and for making distributions and
The draft document is to be discussed by the Government and representatives
from the Isle of Man Branch of the Society of Trust and Estate Practitioners
(STEP) and the Association of Corporate Services Providers (ACSP) at a meeting
at the end of March.