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Introduction to the TSP Licensing Regime. Financial Supervision Commission 24 May 2005. Welcome. Jane D N Bates Head of Authorisations and Companies. Preliminaries. Housekeeping The Authorisations Team Timescales Today’s agenda. Housekeeping. Fire exits Mobile phones Handouts
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Introduction to the TSP Licensing Regime Financial Supervision Commission 24 May 2005
Welcome Jane D N Bates Head of Authorisations and Companies
Preliminaries • Housekeeping • The Authorisations Team • Timescales • Today’s agenda
Housekeeping • Fire 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 – Manager • Helen Cullen – Manager • Kerry Thomson - Manager • Marie Ball – Supervision Officer • Scott Dixon - Administrator
What do we do? • ALL current licensing and vetting • Banks • Building societies • Investment business • Schemes • CSPs • NOT ongoing supervision • TSP licensing and vetting
The TSP Regime - Where we are now? • Fiduciary Services Bill passed by Tynwald • Awaiting Royal Assent • Appointed Day • Enactment 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 Berry Senior Policy Adviser – Companies
TSP Legislative Framework • Legislation & guidance • TSP Regulated Activities • “New” TSP Licence Exemptions • TSP Licence Categories • TSP Financial Resources • Legislative 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” • Advocates • Registered Legal Practitioner • Chartered & Certified Accountants • De minimis (individuals who are Specified Persons only)
TSP Licence Categories • Category 1 – all TSP regulated activities except Trust Corporation • Category 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 accounts • Must provide sufficient information • Conform 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 work • Directors’ solvency declaration • Quarterly liquidity declarations • Clients’ money account • Material 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 Berry Senior Policy Adviser – Companies
How the Commission will process applications Paul de Weerd Senior 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 published • Sets out TSP policy • Eventually consolidate licensing policy for all regulated business • Training and Competency Framework • Consultative document 18 March • Sets out benchmark standards • Recognises 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 process • Carry out the vetting of individuals • Review and discuss with the applicant • Report to Chief Executive • Chief Executive’s recommendation • Commissioners 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 BQ • Last vetted over 5 years ago – full PQ and BQ • Last 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 TSP • Wrap up the “subject to’s” quickly • Issue 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 Bates Head 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 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 offered • Staff structure • Experience within the TSP • Professional advisers here and overseas • Services or advice bought in • Control procedures • Training
Demonstrating Competence – Key Persons • Licensing Policy • Trust Corporations • Training and Competence Framework • Experience and qualifications • We encourage CVs • Explain experience where it is not obvious • Do not under- or over- sell yourself!
Gathering Data • Accounts 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