Offshore Savings in Isle of Man

The Isle of Man is one of Great Britain’s offshore jurisdictions, and it has an exceptionally good reputation directly as a result of the supervision regime in place on the island governing the financial institutions that operate therein, and because of the investor protection scheme in place.

Many of the most reputable financial advisories recommend funds and savings based products based in the Isle of Man to their clients, as part of a balanced portfolio. This is because of the jurisdiction’s reputation on the one hand, and because of the wealth of offshore savings and investments available in the Isle of Man on the other.

If you’ve been recommended the jurisdiction or you’re wondering about the island’s offerings, in this report we examine why the Isle of Man is so well respected, and what kinds of offshore savings, funds and investment account solutions you can find therein.

Investor Protection Isle of Man

The Isle of Man government legislated for the establishment of a fund to which all qualifying financial institutions have to commit. Through this fund investor protection is guaranteed, and if in the event that a manager or trustee of an authorised scheme is unable to satisfy clients in respect of a civil liability incurred by them in connection with their business, affected clients will be paid compensation.

The scheme is not without its critics however, because only £48,000 of an investor’s money is really protected. 100% of their first £30,000 under investment is protected and 90% of the next £20,000 is protected – but the maximum payout is limited to £48,000. This is worth bearing in mind if you do decide that the Isle of Man is the right place for your savings and investments – you may wish to divide up your funds between institutions.

Regulation and Supervision of Financial Services Companies in the Isle of Man

As mentioned, the Isle of Man is almost universally respected in the financial services industry – this is largely because of the level of regulation and supervision in place that all financial services companies have to adhere to when they establish an operational presence on the island.

Any business wishing to commence ‘regulated activities’ – i.e., financial services related business - in or from the Isle of Man has to be licensed by the island’s Financial Supervision Commission, and the Commission will not issue a license unless it is 100% satisfied that the license applicant is “a fit and proper person to undertake the regulated activity.” The ‘fit and proper test’ is both an initial test at the time of granting a licence, and a continuing test in relation to the conduct of regulated activities. The test takes into account integrity, solvency and competence and is very strict and far-reaching. It is as a result of this that only serious companies ever establish themselves on the island, and therefore, as a result, the most reputable financial advisories trust in these companies to do the best for their clients’ funds.

Offshore Saving in Isle of Man

Many of the leading banks, fund managers and financial services companies have a presence in the Isle of Man – from Skandia to Abbey National, from Standard Bank to Coutts – and whilst many of them undertake private banking and investing business for high net worth clients, they also offer slightly more straightforward and mainstream offshore savings solutions. If you’re non-resident in Europe, straight savings solutions on the island can be particularly attractive – this is because you personally fall outside the remit of the European Savings Tax Directive. However, if you are onshore within Europe, you can still benefit from the range of savings products available within the jurisdiction.

You need to speak to your own financial adviser to determine whether the jurisdiction is appropriate for you, and if so, which institutions match your needs best, and which of their offshore savings solutions you can benefit from.