A member of the island’s business community has savaged the financial services regulator over its planned increase in fees.

The businessman, who wished to remain anonymous, said: ‘Simply put, the island cannot afford a regulatory regime that protects itself first to the detriment of the economy.

‘In 10 years’ time, there will be nobody left to licence.’

A new funding model was introduced by the Financial Services Authority in April 2023, with the aim to move from being approximately 50:50 funded by industry and government to being predominantly industry-funded.

Annual fees were increased in phases over three years.

Now a consultation has been launched over what fees should be payable from April 1 next year.

The FSA is proposing that all fees to be increased by +2.9% in line with inflation.

But some sector-specific changes to the fee structure are also planned.

Annual fees for smaller designated business with two employers will be reduced from what would have been £1,178 with a 2.9% increase, to £750. But all volume fees will increase by +5.47%.

Applications for new licence holders could increase by as much as £830 and annual fees for a deposit taker by between £2,263 and £3,772.

The member of the island’s business community said: ‘At a time when the Isle of Man economy is facing real strain, the proposal to hike regulatory fees is not just poorly timed, it is tone-deaf.

‘Businesses are fighting to survive turbulent conditions, yet the regulator’s response appears to be raising its own revenue rather than supporting the stability of the sector it oversees.’

He said the FSA should be focusing on removing the ‘vast’ amount of ‘unnecessary’ regulation, but instead increasingly ‘behaves less like a public watchdog and more like a protected monopoly complete with staff bonuses’ and simply increases fees or impose fines to meet escalating costs.

‘Just as we are seeing in e-gaming, the result will be that businesses begin to seriously question the value of maintaining a presence in the Isle of Man,’ he said.

‘If government and the regulator continue to prioritise bureaucracy over competitiveness and cost-control, the Isle of Man risks eroding its reputation as a stable, pro-business jurisdiction.

‘Over-regulation, increasing fees, and punitive enforcement do not create confidence. They drive investment elsewhere.’

He added: ‘At a time when the Isle of Man financial service industry is on its knees, this is an early Christmas present that nobody needs.’

The FSA has already come under fire over its plans to introduce civil penalties for key individuals in the financial services sector.

Law firm Appleby said the regulator was widely perceived as having taken an ‘unfair and draconian approach’ to imposing civil penalties on regulated businesses in recent years.

FSA chief executive Bettina Roth said the authority was mindful of the challenges being faced by Island businesses.

She said: ‘We believe the proposed changes and inflationary uplift strike the appropriate balance and will enable us to maintain a proportionate and competitive fee structure.’