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Introduction to the TSP Licensing Regime
Financial Supervision Commission24 May 2005
Welcome
Jane D N BatesHead of Authorisations and
Companies
Preliminaries
Housekeeping
The Authorisations Team
Timescales
Today’s agenda
HousekeepingFire exits
Mobile phones
Handouts
Slides on website
Who are the Authorisations Team?
John Aspden – Chief Executive
Jane Bates – Head of Division
Liz Berry – Senior Policy Advisor Paul de Weerd – Senior Manager
Who are the Authorisations Team?
Justine Bowen – ManagerHelen Cullen – ManagerKerry Thomson - ManagerMarie Ball – Supervision OfficerScott Dixon - Administrator
What do we do?
ALL current licensing and vettingBanksBuilding societiesInvestment businessSchemesCSPs
NOT ongoing supervisionTSP licensing and vetting
The TSP Regime - Where we are now?
Fiduciary Services Bill passed by TynwaldAwaiting Royal AssentAppointed DayEnactment of the Codes“Open for business”
Today’s Agenda
Legislation update
How the Commission will process applications
Coffee (and chance to put in written questions)
Today’s Agenda (cont’d)
Preparing an application
Supervisory Regime
Panel session
TSP Legislative Framework
Liz BerrySenior Policy Adviser – Companies
TSP Legislative Framework
Legislation & guidanceTSP Regulated Activities“New” TSP Licence ExemptionsTSP Licence CategoriesTSP Financial ResourcesLegislative Timetable
TSP Legislative Framework
Corporate Service Providers Act 2000 updated
By Fiduciary Services Act [2005]
Collectively = Fiduciary Services Acts 2000 and 2005
TSP Legislative Framework
Fiduciary Services (General Requirements) Regulatory Code [2005]
Fiduciary Services (Clients’ Money and Trust Money) Regulatory Code [2005]
TSP Legislative Framework
Licensing Policy
Training & Competence Framework consultation
Who needs a TSP licence?
TSP Regulated Activities –
By way of business
In or from Isle of Man
Who needs a TSP licence?
“express trust”
Foundations
Annual licence fee banded by number of companies, partnerships and trusts
TSP Regulated Activities
Acting as trustee, protector or enforcer
Trust administration
Trust Corporation (Trustee Act 1961, s.65A)
“New” TSP Licence Exemptions
“Domestic” trusts (residence/domicile settlor/testator)“Specified Persons”
AdvocatesRegistered Legal PractitionerChartered & Certified Accountants
De minimis (individuals who are Specified Persons only)
TSP Licence Categories
Category 1 – all TSP regulated activities except Trust CorporationCategory 2 – acting as co-trustee or protector (individuals only)Trust Corporation – all TSP regulated activities including functions reserved to Trust Corporations (trust & probate law)
TSP Financial Resources
Fit and proper test (solvency criteria) General Requirements Code (Para.11 & guidance)
Applies to business as a whole (CSP & TSP)Going concern (solvency)
TSP Financial Resources
Audited accountsMust provide sufficient informationConform to recognised standards (IAS, UK or US GAAP)Liquidity monitoring (solvency)Liquidity quarterly declaration
TSP Financial Resources
Adequately capitalised (£25,000 paid up)
Sole trader (£25,000 segregated bank deposit)
TSP Financial Resources
Matters on which Auditor required to report to FSC
Relates to annual audit workDirectors’ solvency declarationQuarterly liquidity declarationsClients’ money accountMaterial breaches of Act or Codes
Legislative Timetable
Fiduciary Services Act [2005]Royal assent (June Tynwald?)Into operation (Appointed Day Order incl transitional arrangements)Rehabilitation of Offenders Act 2001 (Exceptions) (Amendment) Order 2005
Legislative Timetable
After enactment
Fiduciary Regulatory Codes into operation
Amendment to Anti Money Laundering Code to include TSPs
TSP Legislative Framework
Liz BerrySenior Policy Adviser – Companies
How the Commission will process applications
Paul de WeerdSenior Manager - Authorisations
Introduction
Information on the FSC website
A reminder of the licensing process
The order in which staff will handle applications
Published Policies
Licensing Policy Consultative Document publishedSets out TSP policyEventually consolidate licensing policy for
all regulated business
Training and Competency FrameworkConsultative document 18 MarchSets out benchmark standardsRecognises value of experience
Improving Information
Handbooks are now free
Guidance on Website to be updated a.s.a.p. after Royal Assent is granted Application form in draft
Handling the application
Few changes: familiar processCarry out the vetting of individualsReview and discuss with the applicantReport to Chief ExecutiveChief Executive’s recommendationCommissioners decide
Changes to the paper
Applicant receives a copy of the entire paper
New structure: risk-based
Includes some information about individuals
Changes to the vetting procedures
Never vetted – full PQ and BQLast vetted over 5 years ago – full PQ and BQLast vetted 2-5 years ago – PD (and last employer’s reference and/or new professional memberships if relevant)Last vetted less than 2 years ago –material changes only
Workflow planning
150 applications
Small team
Efficient handling of workflow
Workflow planning
Handle in order of receipt (in principle)Handle in small batches Availability of contacts at TSPWrap up the “subject to’s” quicklyIssue the licence and move on
Issuing the licence
Licence as soon as ready
No big first batch
To the Board each month for signature
Not signed between Board meetings
Appearance of the Licence
Consolidation in due course
Separate CSP and TSP licences for now
Questions
Any comments or questions now?
Coffee break
Preparing for and Submitting an
Application
Jane D N BatesHead of Authorisations and
Companies
Introduction
Why it is important to prepare
Main areas to address
Gathering data
Presenting your application effectively
Why Prepare?
Commission “shall not grant a licence unless it is satisfiedit is satisfied…”
CSP licence not guarantee of TSP licence
The Three Tests
Integrity
Solvency
Competence
Solvency
Quarterly declaration of solvency
Guidance: £25,000 capital and reserves
Turnover and expenditure in the audited accounts
Competence
Two part test:
The competence of the business as a whole to carry on TSP business in accordance with the Act and Codes
The competence of each key person to carry out his or her role
Demonstrating Competence
- the business as a whole Include a comprehensive Business Plan
Principal sources of business The services to be offeredStaff structureExperience within the TSPProfessional advisers here and overseasServices or advice bought in Control procedures Training
Demonstrating Competence – Key
PersonsLicensing PolicyTrust Corporations Training and Competence FrameworkExperience and qualificationsWe encourage CVsExplain experience where it is not obviousDo not under- or over- sell yourself!
Gathering DataAccounts and financial projections
Staffing and Group structure
Corporate trustees/protectors and what they do
Business Plan
Summary
Licensing is not automatic, but
CSP Licenceholders well placed
Focus on demonstrating TSP competencies
Questions
Any comments or questions now?
Feedback forms at end of session
The Supervisory Regime
Paul de WeerdSenior Manager -
Authorisations
Introduction
Initial thoughts
Build on what we have
Continuity
Incremental development
CSP Supervision Team
Michael Weldon – Head of SupervisionSue Ferrario - ManagerGeraldine Smith - ManagerLynda Cain – Supervision OfficerNathan Holden – Supervision Officer
Handover from Authorisations
Authorisations and CSP team work togetherSame relationship manager for all fiduciary businessAs TSP licensing nears completion, some staff will move to Supervision
CSP Supervision Processes
Annual Compliance ReturnBusiness MeetingsVisits:SupervisoryFocusOn-Site Risk Assessment
TSP Supervision process
Extending the CSP process:Quarterly declaration of solvencyExtend the Annual Compliance ReturnExtend visits to look at trusts as well as companies
Private Trust Companies
Administering the exemptionExempted if administered by a TSPRequirement to notify FSCList with Annual Compliance Return
Focus of Supervisory Visits
Focus on process:KYCAdministration, Record-keepingAccounting
Not second-guessing trust law
Summary
No news is good news!
Over to the Panel
Our guest panellists:
Morning: John Whillis (STEP), Michael Shimmin (ACSP) and John Rimmer (Law Society)
Afternoon: Paul Dougherty (STEP), Chris Eaton (ACSP) and Paul Beckett (Law Society)
