This Is Guernsey

By Simon Tostevin

POLICY COUNCIL members yesterday ruled out a States-funded deposit protection scheme for Guernsey.

Jersey politicians will be asked to approve one but any such system here would have to be funded by the banking industry. There is still no indication as to what the level of protection would be and when it is likely to be introduced.

Speculation had been mounting that the two islands would work on a joint scheme, but that was quashed by yesterday’s announcement and the revelation that Jersey’s States was to be asked to approve a proposition that would guarantee every penny of residents’ savings.

Instead, the Policy Council, following an unscheduled meeting yesterday morning, has agreed to a ‘measured course of action’, which includes meeting all States members on Monday.

‘We, the Policy Council, have listened very carefully to a range of advice we have received and we have decided to put our full weight behind the speedy introduction of a scheme to protect depositors in Guernsey,’ said Chief Minister Lyndon Trott (pictured). ‘Jersey has decided on a slightly different course of action and it’s not for us to comment on the decision taken by the Jersey authorities.’

Commerce and Employment minister Carla McNulty Bauer, whose department is mandated to bring in such a scheme, said that until the findings of the Guernsey Financial Services Commission’s consultation paper with industry on the issue had been presented, it would be impossible to give an indication as to what the protection level might be, despite the UK announcing plans this week to up its protection from £35,000 to £50,000 and Ireland guaranteeing all deposits in Irish banks.

All she would confirm is that the taxpayer would not be put at risk by any scheme and that it would be funded by the industry.

A meeting has been called for Monday lunchtime so that all the issues and options concerning a scheme can be fully explained to States members by representatives of the Policy Council and the GFSC, which has been working with its Jersey counterparts to obtain support from other jurisdictions where the parent banks of local operators are based.

And despite not adopting a joint scheme, Deputy Trott said the two islands had been working closely.

‘We worked very closely with Jersey and the Guernsey Policy Council has taken its decision to further consult with Guernsey States members to make sure they are fully apprised.

‘In the last week I have spoken to Senator Frank Walker [Jersey’s Chief Minister] on more than two-dozen occasions, so any criticisms that we have not worked closely enough is dispelled by that.’

He said that by the Policy Council taking the approach it has it would assure Guernsey residents, the financial services sector, its customers and everyone who does business in Guernsey that it was a safe international finance centre.

Deputy Trott said it was likely a further announcement would be made on Monday after the meeting.

Article posted on 4th October, 2008 - 9.30am