Treasury Minister Alfred Cannan has agreed to raise concerns over potential conflicts of interest at the Financial Services Authority with its chiefs.

Mr Cannan came under pressure in Tynwald this week over the fact that it was possible for members of the regulatory body to serve as directors of businesses licensed by the FSA.

Speaker Juan Watterson chaired a committee that investigated the Kaupthing Singer & Friedlander crash of 2008. It recommended that members of FSA should not be allowed to hold directorships of banks.

This week, he warned: ’You cannot be both poacher and gamekeeper at the same time.’

Of the KSF inquiry, he said: ’One of the things that came through quite strongly was that it undermined the credibility of the regulator to have people who were both directors of regulated entities and then sitting in judgement.

’That was something that the committee felt was quite seriously detrimental to the Isle of Man and its reputation.’

He added that he had seen the register of FSA board members’ interests and was not convinced there was the necessary ’distance’.

Mr Cannan said in Tynwald that he acknowledged the issues raised by Mr Watterson and other MHKs, but a ’balance’ was needed to have people in the FSA ’who have some understanding of the needs for business or evolving needs of the industry’.

The minister added: ’I am completely satisfied at the moment that this recommendation is not materially being impacted by the current directorship of the board.

’I will emphasise this matter back to the FSA, discuss this with the chief financial officer and the chief executive of the FSA, and ensure that we are keeping to the principles of this recommendation and are materially ensuring its integrity as we progress forward with the directorship appointments to the board.’

The issue was raised initially by Lawrie Hooper (LibVannin, Ramsey), who wanted to know whether Mr Cannan was satisfied there were no potential conflicts of interest.

The minister insisted: ’In terms of the operation of the FSA at the moment, the measures that it has in place to identify conflicts of interest and the measures that it is taking to identify those conflicts of interest before matters are both discussed and decided, I am satisfied that the authority is taking the proper steps.’

He said the measures already taken to avoid potential conflicts included the register of members’ interests, that could be examined by senior staff or Tynwald members.

The FSA secretary also reviewed the agendas of authority meetings, in advance, to identify potential conflicts of interest. Where a conflict did arise, the FSA member in question would not be provided with that paperwork and would be excluded from the relevant of the meeting.

Mr Cannan added that the KSF committee recommended that regulators overseeing banks should be allowed to hold ’directorships of trusts, funds and corporate services businesses but they would be barred from being a director of a bank in the Isle of Man’.