Income received by the island’s financial services regulator from discretionary civil penalties jumped from £300,000 to £1.6m, its latest annual report reveals.

The Financial Services Authority says it is committed to supporting the Isle of Man’s reputation as a successful place to do business.

But critics have accused the regulator of clamping down on relatively minor breaches of compliance within the industry.

They contrast this with the ‘relaxed’ regulation by the Gambling Supervision Commission (GSC) which has allowed gaming companies with links to organised crime syndicates to set up here, as alleged in a report by the United Nations Office on Drugs and Crime.

Newly-published accounts for the year 2023-24 show that the FSA continued to operate within its budget agreed with Treasury.

In April last year, the Authority began a transition towards a predominantly industry-funded model.

Fee income for 2023-24 was £6.3m, up from £4.2 million the previous year. Further increases in fees will be phased in for 2024-25 and 2025-26. Consultation on any changes to the fee structure from April 2026 will take place during 2025-26.

Under the new funding model, the costs of enforcement, including legal costs, can be offset against discretionary civil penalty income.

There were four civil penalties issued in 2023-24 which were levied on regulated entities arising from enforcement actions or settlement agreements.

These resulted in income totalling £1,581,811, up from £307,292 in 2023. The balance of £623,382 after enforcement costs was passed on to the Treasury.

Civil penalties are not budgeted and the income is expected to vary from year to year.

Fee income was supplemented by a government grant to the tune of £1.2m, down from £3.5m in 2023.

The report says the government grant was lower than forecast for 2023-24 because of the receipt of discretionary civil penalty income.

Civil penalties can be levied on firms as a result of successful enforcement actions. Settlement agreements include the publication of public notices that raise awareness of the findings of our investigations, along with key learning points for industry.

During the year, two prohibitions of individuals were made and 10 public warnings were issued.

The theme of this year’s report is ‘Making a Difference’ which the FSA says reflects the progress made in meeting its objectives of protecting consumers, reducing financial crime and maintaining confidence in the finance sector through effective regulation.

Lillian Boyle, chair of the Authority’s board, said: ‘We acknowledge the need to recognise and prepare for emerging risks and new opportunities.

‘We take account of the likely direction of international standards, the potential impacts of geopolitical changes in the markets where our firms operate and the pace of change in technology and innovation. This influences our strategic approach.’

Bettina Roth, chief executive officer, added: ‘We are embedding a programme of transformational change at the Authority to ensure we operate as effectively as possible into the future.

‘We are committed to continuous improvement and instilling a culture of high performance. Collaboration remains central to our ambitions, and it is essential for the regulator, industry and government to work together on behalf of the island, particularly during such unpredictable times.’