Depositor compensation scheme ‘is as clear as mud’
Thursday 3rd February 2011, 2:29PM GMT.
CAMPAIGNERS from the Landsbanki Guernsey Depositors Action Group have told deputies that the States has failed properly to explain the depositor compensation scheme to islanders.
The group claimed in a letter to deputies that Guernsey’s scheme was as ‘clear as mud’ and islanders needed to be fully briefed on its workings.
‘In order for a deposit insurance system to be effective it is essential that the public be informed on an ongoing basis about the benefits and limitations of the deposit insurance system,’ LGDAG deputy chairman Gary Blanchford (pictured) said.
He said the States had an obligation to be totally up front, open and transparent regarding the operation and workings of the scheme and argued that that had not happened to date.
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Mr Gary Blachford is very clear in his summing up of the waffle enclosing the Guernsey Depositors’ Scheme. I have withdrawn any money deposited in Guernsey – excepting of course that still enmeshed with Landsbanki-Guernsey which is now in Liquidation. Warning to anyone tempted to put money into Guernsey, read the small print VERY carefully.
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It is not only banks in Guernsey where money is at risk. Most Guernsey registered funds sold to UK expats are HIGH risk of losing your money. Take a look at the all the GLANMORE funds and other funds run by the same managers. In 8 years you would have lost more than 85% of you money. 85% loss and one is a total loss. And most of you think the banks on Guernsey have a risk when depositing cash. Never use any Guernsey financial product to bank or invest in. Unregulated and with ministers on the Island only out to protect their own incomes, what can we expect. Warning avoid Guernsey at all costs.
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I find it difficult to comprehend that, after the collapse of Landsbanki Guernsey in October 2008, there appears to be such complacency on the part of the Guernsey government with regard to keeping retail bank depositors up to date regarding the Guernsey Depositor Compensation Scheme.
How many times have we heard in States debates and in statements to the media that “…we are striving to ensure that we have transparent and open systems of communications with the public, in order that we can all make informed decisions, like banking our hard earned savings”?
Since the introduction of the Guernsey DCS in November 2008 and the appointment, by Commerce & Employment, of the Board of the Guernsey Banking Deposit Compensation Scheme, there have been two leaflets for bank depositors issued by the Board, in April 2009 and August 2010. The August 2010 leaflet is still being given out by Guernsey retail banks despite the fact that the Scheme was changed to a post-funded scheme from a pre-funded scheme in November 2010 and that the Scheme now covers charities, where as previously this was not the case.
Equally important information is the fact that, as from the beginning of the year, in all EU countries the compensation limit has been raised to 100,000 (£85,000) euros. Although Guernsey has decided not to raise their, ‘up to £50,000 limit’, depositors need to be informed of this important development in order to make whatever choices they wish to make about where to deposit their money. Interestingly both Gibraltar and Liechtenstein with respective populations of 29,000 and 33,000 have decided to up their limit to 100,000 euros.
Commerce & Employment have still to tell us why they and the Chief Minister got the details on the implementation on the new EU DCS 100,000 euros so wrong. The Chief Minister blames Commerce & Employment: for once I have to agree with him.
The whole of the Guernsey DCS is sadly in need of a complete review, particularly in ensuring the public are informed on a regular ongoing basis about the benefits and limitations of the actual scheme; until this does take place “as clear as mud” is an apt description
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Maybe Mr Trott can explain the small print?
When he is finished jet setting to Iceland and other far flung destinations!
Ian
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i don:t think, things can be done any better,— we seem to be getting there, slowly !!
dr. tom houghton
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I am driving myself nuts over all this. Recently I have been inundated with banking reps asking me to consider this and consider that – all mostly longer term fixed deposit products. Why?
Do they know something we don’t know?
At my age, I am petrified in leaving my money in cash accounts in Guernsey, lest something like the Landsbanki debacle should strike again, and if and when this happens, are we going to go through this debacle again? And then there’s this Depositor’s Compensation Scheme, and how it is going to operate, and how long will it take to refund some of your money back. Confusion reigns! Once bitten, twice shy.
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I am a bit confused as to why everyone expects someone else to effectively insure bad decisions for them? At the end of the day, those depositing with Landsbanki (as an example) probably knew diddly squat about who Landsbanki were so why did they put their money with them? Greed. So, if they’d chosen ‘safe’ (I use the term loosely!) well known high street banks they probably wouldn’t have had any issues.
If you buy a property you insure it yourself, similarly you take precautions not to buy potentially damaged/dangerous property by commissioning a surveyor. Perhaps Joe Public should start taking similar steps over their other financial assets?
If you have >£50k cash in the bank chances are you can afford a bit of time with an IFA or other professional to assist you with evaluating lots of different options rather than just trying to find the best headline rate you can get.
The time has come to think about why banks would want to offer such high rates of interest (e.g. weak balance sheets they want to strengthen with some nice long term deposits!)
There’s risk in everything we do, time to start evaluating it and perhaps pay the price for safer investments (i.e. lower returns).
Anyway, the Guernsey DCS seems just as understandable as the one in the UK!
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You stick with it Mark, I’m glad you are fully aware of its limitations.
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Mark – I think you should know that a large number of the depositors were legacy Cheshire depositors who had not moved their money when Landsbanki bought the Guernsey Bank.
They did not rate chase to Landsbanki – more they stayed there… in error as it turns out, not really sofisticated depositors more safe haven, slow to change types.
BTW more people would understand the GDCS if they did not keep changing how it was funded.
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Mark, do you know what annoys me more than Landsbanki savers still moaning on and on because they didn’t get compensation from a bank account not covered by a depositor protection scheme ?
It’s people who still perpetuate the myth that those savers were all in Landsbanki by choice ( many weren’t ) chasing the highest rates of interest ( because it wasn’t giving the highest ).
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Landsbanki Guernsey depositors are fully aware that there was no ‘depositor compensation’ in situ when their bank went down in 2008; what they are concerned about now is that no other bank depositor in the Bailiwick is exposed to the frailties of the current Guernsey DCS should their bank go down in the future, and that they are fully conversant with the terms and conditions that will ultimately affect them and many other depositors.
In the current climate are depositors asking their banks leadings questions like:
Is the latest DCS leaflet issued by my bank up to date?
Why is the limit ‘up to £50,000’, when I can now get a bank account in the UK with a guaranteed £85,000?
Why is the limit 100 million in any 5 year period, and what would happen to my compensation should another bank collapse within that 5 year period?
Why can the Guernsey government only offer a limit of ‘up to £50,000’ when an increase to £85,000 and a percentage increase to 170 million limit would still be a relatively small percentage of the current 116,000 million deposits held in Guernsey banks (Sept. 2010)?
Why do we now have a £400,000 office in Brussels, keep up to date with the latest banking information coming out of the EU, but feel it is only important to keep pace with Jersey and the Isle of Man in regard to the Depositor Compensation Scheme?
Bailiwick bank depositors will only have themselves to blame if they lose money should another bank go down in the future; it is no good asking questions after the event, it is too late: those questions do not get answered appropriately by banks, financial regulators and politicians, ask any Landsbanki Guernsey depositor!
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Mark
Which bank were you with in 2008 that had a DCS in force?
What were your premiums for your insurance policy covering your bank deposits, and which insurance co offered the policy?
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Here we go again, they are all coming out of the woodwork slagging off this that and the other.
Landsbanki depositors.
There was no compensation scheme in place at the time.
You are getting your funds back bit by bit.
Why should the poorly paid tax payers bail out those who could afford to invest.
Just get over it and move on.
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John T
If you were to read the article properly you would clearly see that the only thing picked up on is the lack of clarity for all Guernsey depositors in the retail banking sector, nothing to do with what the landsbanki Depositors may or may not get back.
This affects all Guernsey retail banking depositors, now!
We were caught out, we don’t want it to happen again to anyone, hence we are pushing for more clarity and hopefully for a scheme more in line with the UK and Europe.
So your comments don’t really fit in here.
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