By Neil Jones, Market Development Manager, Canada Life International

When considering a recommendation for a client, not only does the adviser have to select a suitable tax wrapper and help create a suitable portfolio, but they must also decide whether to invest through a domestic provider or a provider based in another jurisdiction. If the latter is right for the investor then there is another decision; which jurisdiction to use and there is a whole world from which to choose.

The attraction of investing cross-border has grown year-on-year as investors and advisers not only seek the benefits of a jurisdiction with no local taxes for foreign investors, but also the wider range of product and investment options that are available. The UK market for cross border investing is mature and has led to a number of product developments and enhancements that have become the norm, helping to develop the less mature markets.

Many investors will want to use providers based in countries they are familiar with and in these days of transparency and information sharing agreements, the jurisdiction should also be seen as reputable with a government that has a strong focus on financial services. Nations that maintain a high degree of confidentiality can often be seen as suspicious and this may deter investors who do not want to attract the attention of domestic tax authorities.

The Isle of Man is an ideal location, not only for life assurance businesses but also a destination of choice for international investors. It is a mature financial services centre, not only for the UK cross-border investment market but also for global financial services. Why do I say this – well the commitment of the Manx government and the legislation in place provides peace of mind for investors, exceeding many other financial centres.


The Isle of Man is a crown dependency and part of the British Commonwealth so is independent. Its government, the Tynwald, is claimed to be the longest continually running legislature in the world, dating back to AD979, so few can argue with a claim about having a stable government.

The Manx Government has a long track record of its commitment to financial services and it generates a large proportion of the gross national income, not only providing revenue but also significant employment opportunities. It also appreciates the impact any local decisions may have on overseas investors – for example there are lower probate fees for those individuals domiciled outside the Isle of Man, who only have a policy of life assurance with a Manx company. As financial services companies rely on investment from foreign nationals, the government remains nimble to change and the legislation remains consistent and relevant to global markets.


Naturally there are strong links to the UK although it is not part of the United Kingdom and only an affiliate member of the European Economic Area (EEA). The UK’s Financial Services Act 1986 granted the Isle of Man the status of a ‘designated territory,’ leading to the Isle of Man Insurance Regulations 1986. Financial services providers based on the Isle of Man are regulated by the Isle of Man Government through the Isle of Man Financial Services Authority.

Being in control of its own legislation allows the government to keep legislation relevant to the companies based there and their policyholders. Like any mature financial services market, there are rules around the segregation of assets so that policyholder assets are ring-fenced from shareholder funds. Although not subject to the same EU legislation as countries like the UK, the Government recognised that similar legislation is sometimes required and therefore providers must meet solvency requirements, similar to the EU’s Solvency II. It also fully complies with the Common Reporting Standards and FATCA.

Policyholder protection

The importance of a provider’s financial strength and commitment to the market should never be underestimated and policyholders need comfort in knowing that their chosen company is financially strong and is able to demonstrate compliance with solvency requirements along with domestic and international regulations.

In some jurisdictions it is believed that regulation is enough to provide peace of mind and in many instances this is the case but we know that, with the best will in the world, unforeseen circumstances can arise. Not all jurisdictions have their own policyholder protection scheme and many rely on the domestic schemes however policyholders of a Manx provider are protected by a local scheme; the Isle of Man Life Assurance (Compensation of Policyholders) Regulations 1991. This scheme would meet up to 90% of the liabilities to policyholders.

The choice of jurisdiction will very much depend on the investor’s objectives and the structure of the solution the adviser is recommending. For each case, there may be different factors that can affect the suitability of a particular jurisdiction and therefore a blanket approach for all investors may not be the most suitable.

However, with a proactive Government using effective risk-based regulation, combined with forward-thinking providers with effective and attractive solutions, the Isle of Man can offer investors and advisers peace of mind.

Neil Jones1 100dpi

Neil Jones, Market Development Manager, Canada Life International

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