Funding of administrative expenses of the Resolution Authority

Closed 21 Mar 2021

Opened 8 Feb 2021

Feedback updated 21 Apr 2021

We asked

We asked for views on how the Resolution Authority’s administrative expenses should be calculated and how this amount should thereafter be recovered by means of a levy allocated to banks.

You said

We received 8 separate responses to the Consultation Paper. Of these, none were against the proposed method of calculating the resolution administration expenses.

The Authority proposed that these expenses, for the year 2021-22, should be recovered through levies on an ‘equal share’ basis amongst the banks, early in the year 2022-23. Half of the respondents either had no comment or specifically agreed with this proposal. The remaining respondents had divergent views as to how the levy should be allocated. This included 3 banks, each with different business models, who believed their particular business model should pay a smaller share than banks operating different business models.
 

We did

The Authority believes that resolution administration expenses will be incurred in relation to all banks, certainly for an initial period. It is intended therefore to proceed with recovery of these expenses by means of a levy calculated on an ‘equal share’ basis for the year 2021-22.    

However, if over time it becomes clear that there is a significant divergence between the degrees of ongoing administrative work required for the different types of bank operating on the Island, the Authority would be pleased to discuss this with the banking industry and to consider adapting the levy allocation methodology accordingly.

Overview

This Consultation Paper is about the recovery by the Financial Services Authority, of its operational expenses for bank resolution activities, by means of an annual levy on the banking industry.

Why we are consulting

The consultation seeks views on how the levy on the banking industry should be calculated and applied.

What happens next

Following closure of the consultation period, the Authority will review the responses received and publish a Consultation Response document on the Authority’s website and the Isle of Man Government’s Consultation Hub.

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Audiences

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