DEPUTIES are calling for protection of islanders’ money. Matt Fallaize and 11 others have expressed concern about the lack of any protection for bank depositors in Guernsey at a time when several UK and American banks have collapsed. If that were to happen in the island, customers’ money would not be safeguarded as it is in the UK.
The Guernsey Financial Services Commission has recently discussed the future of its regulatory policies, including the possible establishment of a depositors’ protection scheme.
‘In view of global events and the current volatility of financial markets, we are not content that measures necessary to safeguard the interests of retail banks’ local customers are being pursued as our constituents have a right to expect,’ said Deputy Fallaize. ‘Several of us are meeting the GFSC early next week, primarily to discuss a protection scheme.
‘We have been in correspondence with the Commerce and Employment Department, under whose mandate this matter falls. However, we regret that at present there appear to be no plans to take this matter to the States until the spring of 2009 at the earliest, which in our view is far too long.’
Article posted on 2nd October, 2008 - 2.29pm
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17 Article Comments
Yes it is time that Guernsey had a depositers protection Scheme in Place, just imagine what the outcome will be if one depositer loses out from money invested in any Company within Guernsey the ramifications for the Island and the Finance Industry are just unimaginable, how about the States actually doing something and not just shouting about it, it will be too late once it has happened. Protect the small investor and stop losing out to other jurisdictions
Waht is it with Fallaize - he is guns blazing at the moment. by the way - the UK only protects depositors to £35,000 at present. Once again our ‘young gun’ does not know the facts. From recent proposals put forward by him it looks like he reads th daily mail and regurgetates it!! I think he should sit down and listen to the more experienced people who have worked in business.
genius
You sound like a disgruntled older politician. I think you’ll find the Daily Hate is not an agenda setter for Dep Fallaize. The fact that his many proposals are populist are borne out of listening to the public. That’s what our politicians are there to do.
Or would you rather Guernsey be run by vested-interest business leaders.
Oh dear.
If only we had more dedicated politicians rather than the self serving clique that is driving Guernsey to the wall.
What we know about protection for investors is that it is perceived by investors as a plus for the place where money is invested.
Typically, the GFS and Peter Neville have sat on this for some period of time and then appear on telveision giving the imporession they are being on the ball.
I don’t know how appropriate this protection is to the Guernsey finance industry - is it amjor problem or a Tom Tiddler.
Perhaps David can provide some insight into this issue?
Shame Genuis has to hijack the thread to have a go at Deputy Fallaize. Even sadder, he or she used the shield of anonymity to maake a personal attack
Who’s deposits are we going to protect?
Isn’t there something like £200 Billion in local banks?
How can we protect that sum, when our annual budget is about £300 million, and we are running a deficit already?
Even “local” deposits are likely to exceed a billion.
Where’s it coming from? Are we insuring it with AIG?
Quite right Bob. Just listening to tonight’s news, the UK increasing deposit protection by £50k guarantees 98% of all accounts. The very nature of our banking industry would probably result in a 50k level covering no more than perhaps 60 of accounts. The remaining 40% of accounts would contain substantially more than £50k, invariably running into tens of millions. It is impossible to guarantee those large deposits so its hard to see how we can offer competitive guarantees.
Lots of Guernsey’s banking activities are guaranteed by the parent company, enabling us to attract enormous deposits but how many of those parent company guarantees are worth what they were ?
It is the poor that need protecting, not the rich. We must install guarantees for those with low savings to encourage them to continue saving. Approaching the matter from the top down is typical of this myopic form of governance.
Bob from what I understand the powers that be are looking for a depositors protection scheme funded by the local banking industry.
That obviously makes sense as the island budget could never afford funding the scheme,
In reality, should a local bank or finance house collapse losing investors their savings, then this could be catastrophic for our way of life with confidence in our island finance industry likely to be harmed long term.
Now is the time for our politicians to stand up and be counted and make decisions which they are well paid to do.
Luckily for us US politicians made a decision yesterday which hopefully will help the current situation, but there are some people in the know who are still not convinced.
If it doesn’t work, then what.
If you gamble with your hard earned cash then you may,as expected,lose it.If you however put your savings in a National Bank then it should be guaranteed 100%.As Lawrence said,protection should begin at the bottom for the normal saver who spends his life saving for a rainy day or retirement.Some sort of protection should of course be there for all,but if you are rich you spread your money around and can afford one hiccup somewhere along the line!
Donald
Only problem with that Muzeek, is that as one falls over, the rest are all weakened not only by any inter-bank deposit losses, but also by having to bail out depositors’ losses of a fellow institution.
As one or two get liquidity problems, a disproportionate burden falls on the remainder. If they are already thinly capitalised, what would that do for confidence?
It would damage some (currently) healthy institutions.
Iceland are going to struggle to secure their banks, and their currency has dropped 20% or so. They are begging the unions to repatriate their pension fund investments, in order to shore it all up, and they are less reliant on finance than we are.
We have to rely on the Head-Office guarantees, which makes us look like we are hanging on to the coat-tails of the “proper” economies of the world. Doesn’t bode well for the future of finance, once the regulatory and political knee-jerk sets in.
Fallaize is populist!! unfortunately the population are rarely correct in their decisions as they are very inward looking as to what should happen. Yes they should have a voice and thir opinion should be debated but thankfully the current states have rejected the populist proposals!!
Deposit protection is impossible for Guernsey. They might be able to guarantee up to a certain amount for local residents but the suggestion, if I understand correctly, to provide insurance for all deposits is ridiculous.
Jackie I don’t think anyone is suggesting insurance for all. Rather the feeling is that it is expected that there would be a minimum of protection for private depositors.
The argument that Guernsey cannot afford it will worry investors and reduce confidence in the island as well as providing an assurance for its own people.
What is clear is that the Guernsey regulator has failed to spot that a Guernsey registered bank was at risk. Those of us who looked at this bank in recent months and decided it was a risk too much, wonder why the GFSC were caught unawares. But again they had no clue about the problems at Northern Rock despite a Commissioner being a non executive director of the Northern Rock parent company.
If you want further evidence look at the Comment of 3 October on depositor protection and some of the GFSC comment on consultation re deposit protection.
If Guernsey cannot provide some sort of protection can it remain a major source of offshore deposits? Hardly inspires confidence in a self styled world player,
You are probably correct Jackie, which is why now is the time to get any deposits out of the Channel Islands as suggested in last week’s MoneyWeek. We have been assured by the financial community and the politicians that Guernsey is a safe haven in these turbulent times, and yet we now have the situation with Landsbanki and all the associated uncertainty for their depositors. Are they really in control of the situation? I’m not betting they are which is why in Dragon’s Den speak “I’m out”…
Unless there is a strong deposit guarantee scheme introduced, as well as some sort of cover for Landsbanki depositers if it fails (like the UK announced today on Icesave), I can’t see the channel islands recovering as depositors will move their money elsewhere - currently it makes sense to put money back onshore as EU and UK authorities offer much more protection and will support their onshore bank deposits if they get into liquidity or solvency problems
Genius - Deputy Fallaize is young, hungry & enthusiastic - a breath of fresh air in the house - & about time too… I notice you offer your opinion yet not your name - if you can do any better then put your name forward next time…
Or did you last time & you failed to get in - hence your anonimity…. or shame!!
As for Stephen Trevor’s comments - this is not a GFSC bashing forum - its not their fault that the finance in Iceland has gone belly up is it??
Looks like Guernsey will have to revert to growing tomatoes and having one house each, instead of renting 3 or 4 houses out to the banks.
Looking bleak it has to be said - but the people of Guernsey can hardly complain; they have had it far too cushy for far too long.
It was suggested to Dave Clark in 2002 that the States stop the capital projects which were destroying reserves, but did him or Lyndon take heed? Heck no.
In any case, Guernsey just does not have the Government or infrastructure able to support the system.
Be interesting to know how many of our people who were desperate to be independent months ago now want the UK to come running and help out.
If you cut off your nose………