£11 Million Of Our Money To Ksf Depositors?!

[bishbashbosh]

http://www.manxradio.com/readNEwsItem.aspx?id=32228

 

I can't decide if this is right or wrong? Sure it's horrible what happened and it's a political nightmare. That said, the money never stayed in the Isle of Man and supported only how many jobs at KSF International?

 

£11 million of Manx tax payers money... gone?!

[BETTYBOO68]

http://www.manxradio.com/readNEwsItem.aspx?id=32228

 

I can't decide if this is right or wrong? Sure it's horrible what happened and it's a political nightmare. That said, the money never stayed in the Isle of Man and supported only how many jobs at KSF International?

 

£11 million of Manx tax payers money... gone?!

 

 

that means cutbacks then for islanders, rate increases, no pay rises this year! i bet these savers have a hell lot more millions stashed on other little islands!

dont see why the taxpayers have to pay out and bail out everytime! why not pay it out of the politicians pension fund that would be more appropriate!

[Tempus Fugit]

they could have put another tier on the wedding cake and fixed the pier with that

[monasqueen]

Most countries now have some form of depositors protection, so we'll have to put up with it, but I hope that our politicians are doing all that is possible to get back the funds that were in passage through the UK, and were stolen by the UK Govt. That was a despicable act.

[Slim]

My understanding is that it's a loan to the scheme, and will be repaid eventually though the levies. Anyone know any different?

[manshimajin]

£11 million of Manx tax payers money... gone?!

 

I take it you'll be really angry then when the estimated £150m has to come out of government reserves to meet the compensation payments then? £11m is only going to be the first installment.

Boredom to put this on a more personal basis that means at the moment a transfer of approx £500 per family is being made from Manx families to KSF deposit holders. If we are asked to subsidise them to £150 million that will be about £7,000 per family or if the full £550 million were to paid for by the Manx families it would be £26,000 per family.

 

Most countries now have some form of depositors protection, so we'll have to put up with it, but I hope that our politicians are doing all that is possible to get back the funds that were in passage through the UK, and were stolen by the UK Govt. That was a despicable act.

Monasqueen I agree with you that a lot of counries have now put depositor protection in place and that the transfer by KSF of its depositor funds from the IOM was culpable. Of course we did have a limited scheme for all private depositors in place before the current financial difficulties - better than other offshore centres.

 

May I act as devil's advocate?

 

We live in an age when many people do not accept any personal responsibility if things they do go wrong - "the State should compensate me ". When I read the KSF depositors website there are numerous examples of people who put all their money into KSF. The current front page uses as an example of IOM irresponsibility a depositor who put all his money, £400,000 into KSF - was that a Manx problem or his imprudence? To what extent should we be responsible for people who ignore the rule of "not putting all your eggs in one basket?". I feel more concerned for people who invested small amounts than those who invested multiples of 6 figure numbers.

 

What actions have been taken by the depositors in KSF against the KSF Board members and management? My understanding is that up until that culpable transfer of money out of the IOM KSF was financially perfectly sound.

 

What actions are they taking against the Icelandic Bank regulator? The problems that led to the closure of KSF were, I understand, due to problems in the Icelandic parent which was regulated by the Iceland authorities, not the Manx ones.

 

I am also aware that I read 12 months before any problems with Kaupthing about looming problems with the Iceland economy - and that the Iceland krona devalued dramatically in 2008 (again reported in the press).

 

I know that there are lots of counter arguments but I would like to see these balanced against those that relate to personal responsibility for one's own actions.

 

(Places helmet on head)

 

 

Edit: Slim I hope that you are right - I also hope that the £550 million eventually gets returned. Can the IOM compensation fund manage £150 million if the £550 million is not returned?

[thesultanofsheight]

We live in an age when many people do not accept any personal responsibility if things they do go wrong - "the State should compensate me "

 

Your missing the point though. In most other areas of life (or other investments even) maybe you can wave the personal responsibility card however banks are regulated - they are supposedly overseen by the governments of the countries in which they are based. If a bank fails that is a failure of a government, a central bank or a regulator to do its job properly at the end of the day and people take comfort from the fact that if a bank is regulated its highly unlikely to fail. The same applies to insurance companies - look at Equitable Life in the UK, after years of investigation last week the Parliamentary Ombudsman squarely laid the blame at governments door and said that the policyholders should be compensated as the government had failed in its duty of care to ensure the company was run properly and should have acted before the collapse to better safeguard their interests.

 

In my mind its no different here.

 

Personal responsibility is fine to a point but if you have a deposit in a place that has shouted from from the rooftops for the last 20 years about how well regulated it is and your bank goes tits up I don't think its acceptable to say "Well you should have known the risks"

[Hugh Jampton]

The taxman should investigate if all the depositors had declared ALL their interest to them in previous years before there is any talk of compensation with taxpayers money

[Sebrof]

Your missing the point though. In most other areas of life (or other investments even) maybe you can wave the personal responsibility card however banks are regulated - they are supposedly overseen by the governments of the countries in which they are based. If a bank fails that is a failure of a government, a central bank or a regulator to do its job properly at the end of the day and people take comfort from the fact that if a bank is regulated its highly unlikely to fail. The same applies to insurance companies - look at Equitable Life in the UK, after years of investigation last week the Parliamentary Ombudsman squarely laid the blame at governments door and said that the policyholders should be compensated as the government had failed in its duty of care to ensure the company was run properly and should have acted before the collapse to better safeguard their interests.

 

In my mind its no different here.

 

Personal responsibility is fine to a point but if you have a deposit in a place that has shouted from from the rooftops for the last 20 years about how well regulated it is and your bank goes tits up I don't think its acceptable to say "Well you should have known the risks"

 

You almost have a good point, but I don't think that the IOMG ever said that its system of regulation guaranteed that banks wouldn't fail. There have been a number of examples in the not too distant past of banks going belly-up in the UK (BCCI, Barings, and others), and in no case did HMG bail them out. The reason was that they did not expect there to be any major impact on the banking system as a whole.

 

It must be understood that the reason for the various bail-outs that have occurred recently was a fear that one failure could lead to a general collapse. The UK has bailed out all dodgy banks in the current crisis, and the US has bailed banks out selectively on a case by case basis.

 

My feeling two years ago was that Bradford and Bingley was going to go bust, and I therefore arranged for family money to be extracted and placed elsewhere. We had no exposure to NR or KSF, but I would have done the same with them.

 

What I didn't know was quite how bad everything was going to get, and the paradox was that because it was so bad generally, B&B and NR were bailed out, whereas they probably would not have been in normal circumstances.

 

Anyway, to cut a long story short, I don't believe anybody is entitled to rely on the state to prevent a bank going bust, or to guarantee deposits. History teaches otherwise.

 

S

[manshimajin]

Your missing the point though. In most other areas of life (or other investments even) maybe you can wave the personal responsibility card however banks are regulated - they are supposedly overseen by the governments of the countries in which they are based.

You almost have a good point, but I don't think that the IOMG ever said that its system of regulation guaranteed that banks wouldn't fail.

 

It must be understood that the reason for the various bail-outs that have occurred recently was a fear that one failure could lead to a general collapse. The UK has bailed out all dodgy banks in the current crisis, and the US has bailed banks out selectively on a case by case basis.

As I said I was trying to be a devil's advocate on this matter.

 

If the funds are not recovered there is clearly a recourse to the compensation scheme and the amounts (limited) that it will pay. I would question whether there is any recourse beyond that in those circumstances. Maybe it is reasonable to pay some money up-front to help out which will be returned if the KSF monies are handed back from the UK or Iceland.

 

I assume that the Manx regulators were limited to overviewing KSFs operations here, not the Kaupthing Group. I understand that KSF was well funded and solvent here. The question then is whether the regulator could have foreseen the last minute transfer of funds to the UK and the unwillingness of the UK to hand them back. What, if any, legal liability the KSF directors and management have for deliberatey transferring the funds I don't know - but it does not cover them with glory. It seems odd that directors would agree to the transfer of a quantum of funds that would leave deposits exposed in the company they oversaw as Directors.

 

You pick me up on the point of individual responsibility for one's own financial affairs. But is it sensible for people to put amounts of (as is given in the case on the KSF Depositors website) £400,000 into one bank account - particulalry given that apparently this was the total sum of that particular person's savings? I don't personally think in those circumstances you can put 100% of the blame for what happened onto other peoples' shoulders.

[gazza]

its wrong to be honest, just a waste of cash to be honest, let say 65 year old sid who put 30 grand in there to live off till he dies, now hes cant live, i could well maybe think that it would be fair for him to get some,

 

but i bet a lot of ppl have pleanty to go round so sod them

[thesultanofsheight]

As I said I was trying to be a devil's advocate on this matter.

 

That's fine I accept that I was not directing by response directly at you.

 

If the funds are not recovered there is clearly a recourse to the compensation scheme and the amounts (limited) that it will pay. I would question whether there is any recourse beyond that in those circumstances. Maybe it is reasonable to pay some money up-front to help out which will be returned if the KSF monies are handed back from the UK or Iceland.

 

But the point (as we will find out soon) is that there will not actually be a compensation scheme when we have spent the last 20 years saying that there is one. I guarantee now that the bank will not go into liquidation - it will enter into some form of scheme of arrangement that will gradually manage the bank to a position where money might be paid back over time - and therefore if this happens the DCS will not kick in despite us telling people since SIB that a DCS is in place to compensate them if things went wrong. In my mind that could be regarded as duplicitious. In this instance everything has been done to ensure that the DCS is not activated when the whole reason why many invested here in the first place was the fact that we had a DCS scheme which (sub conciously) appeared to be backed by the Islands AAA rating (ability to meet any shortfalls).

 

Here I am not saying that a scheme of arrangement or such similar thing might not be better for most accountholders, but we have said for years that the DCS will protected them and the first time we get a failure the DCS has not actually been activated.

 

I assume that the Manx regulators were limited to overviewing KSFs operations here, not the Kaupthing Group. I understand that KSF was well funded and solvent here. The question then is whether the regulator could have foreseen the last minute transfer of funds to the UK and the unwillingness of the UK to hand them back. What, if any, legal liability the KSF directors and management have for deliberatey transferring the funds I don't know - but it does not cover them with glory. It seems odd that directors would agree to the transfer of a quantum of funds that would leave deposits exposed in the company they oversaw as Directors.

 

That remains to be seen.

 

You pick me up on the point of individual responsibility for one's own financial affairs. But is it sensible for people to put amounts of (as is given in the case on the KSF Depositors website) £400,000 into one bank account - particulalry given that apparently this was the total sum of that particular person's savings? I don't personally think in those circumstances you can put 100% of the blame for what happened onto other peoples' shoulders.

 

I'm not picking you up (as stated above) however what I am saying is that since the SIB the DCS has been an integral part of the governments marketing message to attract expat accounts. Its deliberately cultivated this image of a strongly regulated trustworthy place to do business with. That has been the whole emphasis of IOMGs marketing for decades and that illusion has attracted billions in the process. Why not put £400k into a Manx bank account if you believe it to be the strongest jurisdiction out there? Its not illogical, and it makes sense if you have £400k to consider putting it all in the IOM rather than Jersey which has no DCS at all. You cannot say that these people have not a) been sensible and b) have not done their research before using a Manx bank. The fact is they based their decisions on information which in the fullness of time might be construed as being incorrect - effectively that if anything went wrong good old IOMG would compensate then.

[Sebrof]

Why not put £400k into a Manx bank account if you believe it to be the strongest jurisdiction out there? Its not illogical, and it makes sense if you have £400k to consider putting it all in the IOM rather than Jersey which has no DCS at all. You cannot say that these people have not a) been sensible and b) have not done their research before using a Manx bank. The fact is they based their decisions on information which in the fullness of time might be construed as being incorrect - effectively that if anything went wrong good old IOMG would compensate then.

 

One reason not to put £400k into an account is that the DCS only covered 75% of up to £30k.

 

So one CAN say that it was not sensible to put £400k into one account (assuming £400k was a high proportion of their total savings).

 

Such depositors have clearly NOT done much research or they would know that:

 

1 Banks do go bust quite often, and are seldom bailed out.

 

2 The IOM is too small to protect depositors except in the case of the failure of a very small bank with few deposits.

 

The fact is that the IOM scheme was designed to protect small savers, not people with over £30k.

 

S

[thesultanofsheight]

Sebrof' date='Jan 31 2009, 07:15 PM' post='394084' One reason not to put £400k into an account is that the DCS only covered 75% of up to £30k. DCS only covered 75% of up to £30k. So one CAN say that it was not sensible to put £400k into one account (assuming £400k was a high proportion of their total savings)

 

Oh yes sorry its totally irresponsible of them not to have set up 13 separate accounts (each with upto 13 separate banking license holders) so that each one had no more than £30k in it. Get real for one minute please. Which leads on to another issue in that the AML requirements are such a pain in the arse here your positively put off setting up more than one account as the paperwork and ID requirements for an expat are tortuous and protracted at best. You wouldn't be wanting to go through that more than a few times and it positively discourages diversification of exposure.

 

Such depositors have clearly NOT done much research or they would know that:

 

1 Banks do go bust quite often, and are seldom bailed out.

 

2 The IOM is too small to protect depositors except in the case of the failure of a very small bank with few deposits.

 

The fact is that the IOM scheme was designed to protect small savers, not people with over £30k.

 

I'm sorry but IOMG and the banks here positively went out of their way to build the veneer of safety, dependebility, and security across the whole industry. People rarely dig below this veneer and therefore you can't just say its their fault for believing what they were being told.

[Sebrof]

Which leads on to another issue in that the AML requirements are such a pain in the arse here your positively put off setting up more than one account as the paperwork and ID requirements for an expat are tortuous and protracted at best. You wouldn't be wanting to go through that more than a few times and it positively discourages diversification of exposure.

 

Well, I agree there, but the AML regs were imposed by the EU, and apply throughout the EU and its hangers-on. They are not the fault of the IOMG, and are not peculiar to the IOM.

 

I'm sorry but IOMG and the banks here positively went out of their way to build the veneer of safety, dependebility, and security across the whole industry. People rarely dig below this veneer and therefore you can't just say its their fault for believing what they were being told.

 

I agree there, too, in that the DCS scheme is not as watertight as it has perhaps been promoted to be. But I disagree that people are not at fault for accepting uncritically what a government tells them.

 

Do you believe every word politicians utter?

 

You haven't addressed my point that the DCS offered very limited cover and was almost irrelevant to people with £400k to invest. I have all along said that it was unwise for people to put all or most of their savings in a high return/high risk account, and the DCS has no bearing on that at all.

 

S