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Topics: Kaupthing Singer & Friedlander
Offshore centres must ensure their compensation schemes are understood by depositors and should also consider whether an Ombudsman scheme is justified.
The recommendations come as part of Michael Foot’s Review of British offshore financial centres, commissioned against a backdrop of worldwide economic and financial melt-down and the collapse of Icelandic banks which impacted on Guernsey and the Isle of Man.
Foot says a key lesson learnt from the failure of Kaupthing Singer and Friedlander (Isle of Man) was compensation schemes for retail depositors need to be able to pay out quickly in the event of bank failure.
Offshore centres also need to assess the effects of any liability cap on protection schemes, as there could be a varying impact on depositors with different sized banks.
Any jurisdiction wishing to have a liability cap must now consider if it can be adequately explained to depositors. They must also assess if a deposit protection scheme for all depositors is required or just one offered to local residents.
Foot also asked offshore centres to consider whether an Ombudsman complaints scheme along the lines of the UK model, currently only offered by the Isle of Man, may be justified.
The review also makes a number of key recommendations in areas including economic planning, tax transparency, financial sector regulation and tackling financial crime.
Foot suggests these could provide benchmark standards for British offshore centres and they should publish regular reports outlining their progress in meeting the requirements.
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Foot...
...according to those who have had the pleasure of his company, has always put the boot in the IFA camp, the IFAs who as he says refuse to give in. In the eyes if those who know him of old he is the last person who should be reviewing anything in financial services. But I don't know him and if I do meet him I hope they are wrong. What worries me is that he and Ms Sergeant are 'advising' the Tories on regulation!! God help us..
Posted by: Evan Owen
Foot without boots
Foot said nothing that we didn't know already. In acknowledging the role played by the Crown dependencies in attracting money from across the world & funneling it into the City he could only make recommendations that would make that activity conform more transparently to international standards. However, reading between the lines Foot made observations that would make a wise & prudent person think twice before being lured into depositing in places like the IoM. Not until the Crown dependencies have a credible compensation scheme in place that delivers quickly what it promises can depositing offshore be considered safe & secure. Jim for Justice http://ksfiom-blog.blogspot.com
Posted by: Jim for Justice
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The IoM had already been--
advised. The PAG, the official alternative voice on the Island of Man had already specified new requirements for the Depositor Compemsation Scheme. Their suggestion was cavalierly disregarded by the IoM government. The IoMG, in my opinion, is not interested in protecting the depositors. it is interested in protecting the banks. The conflict of interest is clear. To put it bluntly: If you're going to invest on the IoM be aware that depositor protection is still a joke. Kaupthing IoM failed because of FSC regualtory incompetence, and the IoMG just washed its hand. Be smart, don't risk it.
Posted by: follow_the_tao