1. Introduction to the TSP Licensing Regime Financial Supervision Commission 24 May 2005

2. Welcome Jane D N Bates Head of Authorisations and Companies

3. Preliminaries Housekeeping The Authorisations Team Timescales Today’s agenda

4. Housekeeping Fire exits Mobile phones Handouts Slides on website

5. Who are the Authorisations Team? John Aspden – Chief Executive Jane Bates – Head of Division Liz Berry – Senior Policy Advisor Paul de Weerd – Senior Manager

6. Who are the Authorisations Team? Justine Bowen – Manager Helen Cullen – Manager Kerry Thomson - Manager Marie Ball – Supervision Officer Scott Dixon - Administrator

7. What do we do? ALL current licensing and vetting Banks Building societies Investment business Schemes CSPs NOT ongoing supervision TSP licensing and vetting

8. 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”

9. Today’s Agenda Legislation update How the Commission will process applications Coffee (and chance to put in written questions)

10. Today’s Agenda (cont’d) Preparing an application Supervisory Regime Panel session

11. TSP Legislative Framework Liz Berry Senior Policy Adviser – Companies

12. TSP Legislative Framework Legislation & guidance TSP Regulated Activities “New” TSP Licence Exemptions TSP Licence Categories TSP Financial Resources Legislative Timetable

13. TSP Legislative Framework Corporate Service Providers Act 2000 updated By Fiduciary Services Act [2005] Collectively = Fiduciary Services Acts 2000 and 2005

14. TSP Legislative Framework Fiduciary Services (General Requirements) Regulatory Code [2005] Fiduciary Services (Clients’ Money and Trust Money) Regulatory Code [2005]

15. TSP Legislative Framework Licensing Policy Training & Competence Framework consultation

16. Who needs a TSP licence? TSP Regulated Activities – By way of business In or from Isle of Man

17. Who needs a TSP licence? “express trust” Foundations Annual licence fee banded by number of companies, partnerships and trusts

18. TSP Regulated Activities Acting as trustee, protector or enforcer Trust administration Trust Corporation (Trustee Act 1961, s.65A)

19. “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)

20. 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)

21. 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)

22. TSP Financial Resources Audited accounts Must provide sufficient information Conform to recognised standards (IAS, UK or US GAAP) Liquidity monitoring (solvency) Liquidity quarterly declaration

23. TSP Financial Resources Adequately capitalised (£25,000 paid up) Sole trader (£25,000 segregated bank deposit)

24. 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

25. 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

26. Legislative Timetable After enactment Fiduciary Regulatory Codes into operation Amendment to Anti Money Laundering Code to include TSPs

27. TSP Legislative Framework Liz Berry Senior Policy Adviser – Companies

28. How the Commission will process applications Paul de Weerd Senior Manager - Authorisations

29. Introduction Information on the FSC website A reminder of the licensing process The order in which staff will handle applications

30. 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

31. 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

32. 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

33. Changes to the paper Applicant receives a copy of the entire paper New structure: risk-based Includes some information about individuals

34. 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

35. Workflow planning 150 applications Small team Efficient handling of workflow

36. 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

37. Issuing the licence Licence as soon as ready No big first batch To the Board each month for signature Not signed between Board meetings

38. Appearance of the Licence Consolidation in due course Separate CSP and TSP licences for now

39. Questions Any comments or questions now? Coffee break

40. Preparing for and Submitting an Application Jane D N Bates Head of Authorisations and Companies

41. Introduction Why it is important to prepare Main areas to address Gathering data Presenting your application effectively

42. Why Prepare? it is satisfied Commission “shall not grant a licence unless it is satisfied…” CSP licence not guarantee of TSP licence

43. The Three Tests Integrity Solvency Competence

44. Solvency Quarterly declaration of solvency Guidance: £25,000 capital and reserves Turnover and expenditure in the audited accounts

45. 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

46. 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

47. 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!

48. Gathering Data Accounts and financial projections Staffing and Group structure Corporate trustees/protectors and what they do Business Plan

49. Summary Licensing is not automatic, but CSP Licenceholders well placed Focus on demonstrating TSP competencies

50. Questions Any comments or questions now? Feedback forms at end of session

51. The Supervisory Regime Paul de Weerd Senior Manager - Authorisations

52. Introduction Initial thoughts Build on what we have Continuity Incremental development

53. CSP Supervision Team Michael Weldon – Head of Supervision Sue Ferrario - Manager Geraldine Smith - Manager Lynda Cain – Supervision Officer Nathan Holden – Supervision Officer

54. Handover from Authorisations Authorisations and CSP team work together Same relationship manager for all fiduciary business As TSP licensing nears completion, some staff will move to Supervision

55. CSP Supervision Processes Annual Compliance Return Business Meetings Visits:  Supervisory  Focus  On-Site Risk Assessment

56. TSP Supervision process Extending the CSP process: Quarterly declaration of solvency Extend the Annual Compliance Return Extend visits to look at trusts as well as companies

57. Private Trust Companies Administering the exemption Exempted if administered by a TSP Requirement to notify FSC List with Annual Compliance Return

58. Focus of Supervisory Visits Focus on process:  KYC  Administration,  Record-keeping  Accounting Not second-guessing trust law

59. Summary No news is good news!

60. 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)