GFSC sees benefits in UK banking regulation overhaul
Thursday 24th June 2010, 2:30PM BST.
AN OVERHAUL of how banking regulation is handled in the UK has been welcomed by the Guernsey Financial Services Commission.
It was revealed last week that Chancellor George Osborne plans for the Bank of England to take over most of the Financial Services Authority’s responsibilities by 2012, while the rest of its duties will be split between two new bodies which will protect consumers and another to tackle white-collar crime.
And while the GFSC believes the changes will have little impact on business in Guernsey or the way the commission works with UK authorities, Philip Marr (pictured), director of the banking division at the GFSC, believes the changes will definitely benefit all UK financial institutions.
‘The transition of certain powers from the FSA to the Bank of England is to be welcomed if it leads to more effective macro-prudential supervision of the banking system and the finance sector generally and also to improved or more effective micro-prudential supervision of financial firms, including day to day oversight of individual bank safety and soundness.
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He also said in the main Press article:
“Although this was clearly a political decision there was a general consensus that the previous tripartite arrangements between HM Treasury, The Bank of England and the FSA did not work as well in practice as they were meant to in theory, particularly in the lead-up to and at the height of the financial crisis of 2008.”
That I would say was a complete understatement, as far as the FSA was concerned, and this has been clearly shown in select committee reports, Guernsey was collateral damage and in fact things between the FSA and the GFSC in the run up to Landsbanki Guernsey being put into administration were not working at all. The only problem was that the GFSC did not appear to realise that they were not working and were placing all their reliance on the FSA and the ambiguous signals coming from them, without carrying out their own due diligence. This is made quite clear by reading the letters that passed between Peter Neville ( The then Director general of the GFSC) and his counterpart at the FSA. Those letters were entered in evidence at the Treasury select Committee hearing on the banking crisis.
In the meantime the same was happening to the States of Guernsey, namely its Chief Minister, who was being strung along buy the UK Treasury and Ministry of Justice who instead of representing Guernsey were just leading our politicians along by the nose, whilst pursuing their own interests at our expense. Why is the UK a preferential creditor in Iceland and the landsbanki Guernsey depositors not? Because treasury left us out of the equation, but left the Chief Minister believing that they were acting in our interest. It took him eight months before he realised he’d been had.
What I find amazing is the fact that Guernsey’s Government have not taken the UK Government to task and organised their own select Committee type inquiry to find out exactly who did what, when & why. I suspect its because too many mistakes have been made by both GFSC and Government along the line and the last thing they want coming out is the truth in an open honest inquiry.
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Anyone interested in reading the damning correspondence between the GFSC’s Director General and his counterpart at the FSA? The letters are publicly available at:
http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/144/144iii39.htm
(copy and paste URL into browser if unable to link)
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The Guernsey FSA does not work at all. They oversaw the change of rules that allows banks to issue “çomfort letters” that have no force in law. they took care that depositors were kept in ignorance of this significant change.
It is a shame that they will not be disciplined and or punished for this egregiously revolting piece of work.
I have told all my friends in China about the advantages of banking in Guernsey. I can only hope that the island is back to a dependence on tomatoes in the near future. I of course will not buy a single one of them.
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Yes Gary, It is becoming more clear that both UK Treasurey and GFSC made the most appalling panic button decisions in October 2008. I suppose it doesn’t really matter to those responsible after all they will be collecting huge salaries and pensions whatever is uncovered. Tough on State pensioners like me. Whatever other small savings I had in Guernsey have been removed as I just DON’T TRUST Guernsey any more.
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What a load of old flannel – the GFSC welcomes the changes in the UK banking system and the FSA – we, the savers of Landsbanki Guernsey, could have told the director of the GFSC months ago to get his head out of the sand and take note but as with all things associated with the Guernsey administration, be they governmental or institutional the ploy has been, to paraphrase WH Deedes, to keep head firmly buried and therefore expose the thinking parts.
Whilst the changes to regulations in the UK are admirable when will the GFSC allow a full disclosure of its inept supervision of the banking sector prior to the Landsbanki collapes and more impoortantly when will it show that it has acted accordingly and provide current savers with the security they require. Until such time cash flight will continue.
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Guernsey could redeem itself and bring back confidence in the banks by introducing a one-off Bank tax, sufficient to pay the outstanding money lost by depositors. It is a simple,and principled way to move forward in this sorry saga brought about by GFSC and Government negligence.
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Meanwhile, it seems to me that every thing about the plight of the ordinary saver who lost money in the Landsbanki fiasco has been forgotten, apart from the excellent work that the savers group continue to do. Amazing what time does NOT heal! Of course there must be many highly paid people in the banking world and the States of Guernsey, that are glad that the whole affair has largely gone to ground. I am sure there are many people whose lives are ruined.
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Why would they want to pay depositors what they’ve lost? It’s part of the risk of investing your money! You may say “saved” but anytime you place your money with an institution expecting interest, it’s investing. Yes it sucks when you lose, but that’s the risk. Do you complain when you gain?
You want to save your money? You buy physical (gold/silver/platinum/palladium). That’s the only way. It doesn’t matter where you keep your money otherwise, whether it be sterling or USD (etc) it’s all paper “funny” money, created with a few taps on a keyboard!
Why have no faith in Guernsey exclusively? It’s probably one of the least corrupt financial jurisdictions around (by dint of it being under such close scrutiny from outsiders). Just look at the USA for an example of a completely corrupt system!
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Cynic
Easy words! Bet you’d not written them if you’d lost money! Not got a bank account either??!!
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Cynic
There’s a world of difference between a simple deposit of life’s savings and an investment which entails varying complexities of structure, spanning the whole gamut of gearing and risk.
Most simply deposited life’s savings in the Cheshire and (probably somewhat foolishly, in hindsight) failed to move them elsewhere as soon as they learnt that the GFSC had authorised the sale of their savings to an Icelandic bank that they’d never heard of.
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Easy words? Hardly. Unfortunate reality – yes.
Is it “fair” that UK & global politics (amongst other things) deprived these people of their money? No it’s not. But is it fair for other people to be taxed to give them back what they lost due to ignorance or carelessness or both? (It’s not as if the change to the Icelandic bank wouldn’t have been notified to these people – they made the choice to leave their money in those accounts)
Do I have a bank account? Yes – but only a current account. Am I able to save? No – I’m trying to pay of a mortgage and meet all the bills. Do I see a rosy future? Not at all. Do note that the unfortunate loss through Landsbanki referred to is an inevitability of the global economic system. [If you're asking "why" here's a few words for you to research. "Ponzi Scheme" "Fractional Reserve" and try researching these following together with "Ponzi": "Social Security" and "Fractional Reserve Banking". In the light of your research you may also wish to research "Cognitive Dissonance". Take the red pill before it's too late.]
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Cynic
I would suggest you do a very small amount of research as depositing your money in a bank account is not the same as investing, try as hard as you like as many have done to convince otherwise but your wrong, fact.
So you think buying metals is the only way to save your money? its really that simple is it? and ofcourse the prices will always go up and never down? just ask Mr G Brown.
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Again we see the confusion over ‘investment’ and ‘deposit’ – Those that have lost their money through the collapse of Landbanki were ‘depositors’. GFSC needs to do the right thing – from a political and moral standpoint and ensure that the customers of a bank under their jurisdiction do not lose any deposited funds.
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John
Thanks for those words, spot on. People like cynic are typical of so many who believe that depositors were speculators. No they were people trying to look after hard earned money in a resposible way. Again people without savings who have spent all money earnt on wonderful lifestyles and then depend on the states to help them out in their old-age are seemingly the winners. A bank IS a bank, and we the un-educated islanders have relied on the island regulating these banks. BUT NO MORE!
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A depositor is not really an investor.
But please note, anyone depositing at a rate higher than the the risk-free rate (ie the rate offered by the government) is taking some level of risk.
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