Guernsey Financial Services Commission loan protection agreed 26/11

Here is one answer :The Treasury Minister's vowing he'll do all he can to get deposit protection in place by the end of the…
year. A new technical group, chaired by Deputy Charles Parkinson held
their first meeting this morning... looking at the introduction of a
scheme. Legislation's being drawn up and plans are then expected to go
before the States at the end of November. It will ask politicians to
approve measures for financial institutions to guarantee savers' money.
Banks have been asked for provide certain technical data by the end of
next week and the group will then meet again.


BY THE END OF THE YEAR , NO RUSH THEN!

PETER HARWOOD, the chairman of the Guernsey Financial Services Commission, made a rare public statement yesterday to rebut criticism from Vale deputy Matt Fallaize.
The States member had claimed that deputies had been told in a meeting with the regulator that all banks trading in Guernsey were secure. But in a letter sent to all States members, Advocate Harwood (pictured) said that was not true.
‘I was present at the meeting and I want to make it clearly understood that at no time during the meeting did any representative of the commission make comments on banks’ security or capitalisation,’ he said. He said the GFSC had been made aware by Landsbanki Guernsey before the meeting that it had begun to experience a significant level of withdrawals from its depositors.
‘This information about the bank was communicated to the chief minister immediately before the meeting with States members and repeated to members of the Policy Council at the meeting held later that afternoon,’ he said.
* Deputy Fallaize refused to back down yesterday.
‘What we know from Mr Harwood’s letter is that concerns were raised about Landsbanki Guernsey before the meeting because the chief minister was briefed,’ he said. ‘I would ask why that information was not made available to all the other deputies?’ (from thisisguernsey)

There have been numerous comments through all the media about the Landsbanki crisis.
It is clear that they way that this has been handled by our authorities has caused the Bailiwick of Guernsey horrendous damage throughout the world potentially putting our whole economy at risk. It is clear, too, that this could have been avoided by different action and it is therefore necessary to do two things:
1.) Take action to put matters right
2.) Investigate the detail of what happened, when exactly did our authorities know there was a problem, who told who and when ,and what was done or not done. We need to know who those are who jepoardised the very future of our Island.

1.) The action which needs to be taken is to stop all the spin, which no one believes, and to start being honest. This means admitting that our authorities got things wrong, were too complacent about the security of bank deposits and the financial sector in general, that we have had our financial legislation priorities wrong, and that we still have areas to resolve in that respect. The pretence has got to stop.
Our political leaders have to make person to person representations to the UK politicians dealing with the Landsbanki and indeed the world financial crisis. Dealing with the UK Treasury on a top level official basis has been a good start.
We need to make a public statement that we will equal the depositer protection offered by Jersey. This means changing the idea of having a bank funded deposit protection scheme, and do what is necessary to provide investor security, which we now know means security in our economy.
Not only must we equal what Jersey is offering, we have to work with them as a Channel Islands team.
We have dragged Jersey's reputation down with ours because of our dithering and indecisiveness.
There has to be a joint approach on financial policy and end the petty rivalries there have been in the past.
We must put ourselves in a position where we can take swift action to deal with events, and the Policy Council needs to appoint a team of politicians whose responsibility is day to day monitoring of the situation. The answer is not to give more power to the Chief Minister because we cannot afford the risk of mistakes being made.
The politicians must take firm control of the policy and direction of the Guernsey Financial Services Commission so that the government of our Island decides on financial legislation priorities. There needs to monitoring and scrutinising of the role and workings of the GFSC by the equivalent of a House of Commons Select Committee, so that someone is effectively regulating the regulator. The role of the GFSC has to be focused on sensible supervision and regulation ,rather than not fit for purpose regulation.

2.) The investigation we need to set up should be Chaired by an elected politician who is not seen to be identified with the current crisis together with other politicians who are not afraid to question the actions of colleagues , senior public servants and senior figures in our financial community. The investigation committee would need to be assisted by individuals with an understanding of the financial sector who were not States Members. The investigation would look at the role of the GFSC, Chief Minister, Policy Council, Treasury and Commerce and Employment , senior public servants and anyone else relevant.

I would be interested to see what others think about my suggestions as to how to move forward.

Tony Webber

AN INQUIRY is to be launched into the regulator’s handling of the Landsbanki Guernsey crisis.
This follows the bank’s customers being left out-of-pocket after administrators announced an initial repayment of just 30p in every pound held on deposit.
Many savers questioned the role of the Guernsey Financial Services Commission after it emerged that Landsbanki Guernsey had sent more than £36m. to UK-based Heritable Bank, its sister company now in administration.
Asked by the Guernsey Press yesterday why, with the knowledge that banks in Iceland were on the verge of difficulties, Landsbanki Guernsey was allowed to send large sums of money to a fellow subsidiary of Iceland’s second-largest bank, GFSC director general Peter Neville (pictured) said: ‘You have asked for a comment on the actions taken by the commission in relation to Landsbanki Guernsey and Heritable Bank in the UK.
‘This raises the whole question of the commission’s approach to the regulation and supervision of Landsbanki Guernsey.
‘It is normal practice for a regulator to have an inquiry into its performance carried out following a major event such as this. I have therefore recommended to our commissioners, and they have agreed, that an independent person of undoubted standing and expertise should be appointed by the commissioners to conduct such an inquiry as soon as possible.’ (from thisisguernsey)

Whilst the decision to set up an enquiry is welcome into how the GFSC acted in respect of Landsbanki,etc., it isn't right that this enquiry is set up by the Commission themselves with them choosing the independent person carrying out the enquiry. That person would report to the GFSC and they would have some control of the enquiry. No, the enquiry should be set up by the States through the Policy Council otherwise the terms of reference of the enquiry, who it reports to and when, will not be seen as as trully indepependent.
Tony Webber

FEARS that establishing an industry-funded depositor protection scheme might not happen have been eased by Treasury minister Charles Parkinson.
He brushed off a warning from a leading figure in the island’s financial services sector, who said in yesterday’s Guernsey Press that he might find it difficult to negotiate and agree such a scheme, by stating that talks on its introduction had been progressing well.
‘Initial discussions within the technical group I am heading, which includes three representatives from the Association of Guernsey Banks, have been very positive,’ said Deputy Parkinson (pictured).
‘We are due to meet again next week to discuss the detail behind the proposal for a depositor protection scheme and I expect to be able to make a further statement on our progress after that meeting.’
The leading financial figure, who did not wish to be named, wrote to the newspaper to warn islanders that placing the financial burden on banks would be a very unattractive proposition for them (from thisisguernsey)

Is there more trouble ahead

GLANMORE Property Fund

I wonder why the United States Of America, United Kingdom,Germany,France and many other countries have now acted and are providing some form of protection for depositors,assistance to the banking and finance sectors with various bail out schemes costing billion of pounds and then we have Guernsey


Still waiting ? ? ? Still waiting ? ? ?


The Iwantmymoneybacklandsbanki group will have a field day over the handling of this by the States Of Guernsey and the GFSC,there are already several major editorials being prepared by the big financial newspapers asking this question

Can Guernsey be a place to be trusted with your finances ?the damage when they are shortly released could seriously erode confidence in Guernsey PLC

Will make interesting reading

GUERNSEY’S depositors’ compensation scheme will match the UK’s in offering protection of up to £50,000 per person.
The Policy Council’s technical group working on the introduction of scheme for the island met for the second time yesterday.
Chaired by Treasury minister Charles Parkinson , the group comprises representatives of the Commerce and Employment Department, the Guernsey Financial Services Commission, and the Association of Guernsey Banks.
The system will be bank-funded.
‘I believe that we have today made significant progress towards introducing a depositors’ compensation scheme for Guernsey with a ceiling of £50,000, as is currently the case in the UK,’ said Deputy Parkinson.
‘We are considering schemes already in use in other small jurisdictions and introducing some of our own thinking.’ (from thisisguernsey)

I wonder if this will benefit the clients of Landsbanki,is it just me or does anyone else have no confidence in Mr Parkinsons public comments ?

My Favourite Parkinson Quote

Interview with Treasury and Resources Minister Deputy Charles Parkinson on BBC Five Live's Wake Up To Money programme, Tuesday 14 October

Will savers caught out by Landsbanki Guernsey get any benefit or is it too late for them?

Mr Parkinsons Reply


There is no Depositor Protection Scheme in Guernsey but of course you don’t need one where a bank has assets which cover its liabilities, and Landsbanki Guernsey does have assets. It’s now in administration and the big question is, are there sufficient assets to bail out the depositors?

GUERNSEY is pressing the UK Government to find out if it wants to examine its relationship with the Crown Dependencies.
It follows comments by Chancellor Alistair Darling at a Treasury Select Committee inquiry into the banking crisis. Isle of Man representatives have reacted angrily to the situation after Mr Darling said it was a ‘tax haven sitting in the Irish Sea’.
Chief Minister Lyndon Trott (pictured) said events at Monday’s inquiry were followed up.
‘We note with interest the Chancellor’s comments about the need to take a “long hard look” at the relationship between the UK and the Isle of Man and are seeking clarification from the UK Government on any potential implications for the other Crown Dependencies,’ he said in a statement.
It appears Mr Darling was concerned about people being unclear when they invested money in the islands that they were not covered by Britain’s compensation scheme if a bank collapsed.
In calling for the examination, Mr Darling stressed there should not be a ‘knee-jerk reaction’. (from thisisguernsey)

£50,000 money protection scheme agreed in the States but not for Business or Charities ...
is this enough?

Well once again it wasnt a unilateral decision it was forced by the landsbanki circumstances,will it be retrospective to help the landsbanki account holders?

So obvious and demeaning

Other misconceptions the GFSC wants to rectify…


1 Depositors were not aware of the takeover of Cheshire Building Society’s Guernsey subsidiary in 2006 - incorrect.
They were all written to individually in the summer of that year and a notice was placed in La Gazette Officielle.
2 The GFSC was wrong in permitting LIhf to take over Cheshire Guernsey - incorrect.
LIhf was a top 500 bank - ranked 397 in the world at the time of permission being given to the takeover. By July 2008 it had moved up to 177.
It met all the standards required and the acquisition also gave the Guernsey bank a future, which was otherwise in doubt.
There was also a very strong letter of comfort from the parent company and there had been some very strong stress testing done at the time. It was also the strongest of all the Icelandic banks at the time.
3 The GFSC should have prohibited all upstreaming after the Northern Rock Guernsey incident - incorrect.
Guernsey’s banking model is partly founded on the basis of upstreaming.
There would also have needed to be a clear threat to depositors to stop it and, if the GFSC had taken such an action, it believes it might have caused a crisis and been accused of being uncommercial, overbearing and heavy handed.
4 The GFSC has not been taking enough action since Landsbanki’s collapse in getting depositors’ money back - incorrect.
On 13 October the GFSC wrote to the Icelandic regulator calling on LIhf to honour the commitment given in its public undertaking to make any payments Landsbanki Guernsey could not make. This covers both the £12.75m. owed by LIhf and the £36.3m. owed by Heritable. This letter has been followed up on several occasions demanding a reply.
In addition, joint administrators Rick Garrard and Lee Manning have continued to take the appropriate steps and Chief Minister Lyndon Trott has also written to the minister of finance in Iceland calling on the Icelandic Government to make sure LIhf honours its obligations.
All these calls to honour the obligations are now with the Resolution Committee set up in Iceland to resolve the banking crisis. The UK Government is also representing Guernsey’s interests and those of the Landsbanki Guernsey depositors in negotiations it holds with the Icelandic Government.
5 The GFSC did not protect depositors because it confused its regulatory role with a promotional one - incorrect.
The GFSC does not have a promotional role at all. GuernseyFinance has promotional responsibilities for the island. (from thisisguernsey)

From 26 November 2008 all retail deposits are protected by the introduction of the Guernsey Banking Deposit Compensation Scheme. The Scheme has been prepared rapidly in response to recognition by the Commerce and Employment Department and the Policy Council of the urgent need to introduce such a measure.

The key elements of the scheme are:

The scheme covers all individual retail depositors, wherever they live.

The scheme provides compensation of up to £50,000 per person per licensed bank, no matter how many accounts they have with that bank.

The scheme will pay compensation within three months of a bank failure.

The scheme will be operated by an independent board which will be separate from both the Guernsey Financial Services Commission and the States of Guernsey.

The maximum amount of compensation is capped at £100 million in any 5 year period.

The scheme will be funded by a combination of insurance and a levy on the banking industry in the event of a bank failure, taxpayer’s funds will not be involved.

The scheme was developed by a technical working group which included representatives of the Association of Guernsey Banks. Several of the proposals in the scheme are innovations specifically suited to Guernsey’s diverse banking industry.

It provides an appropriate level of compensation to depositors but also ensures that the Banks will have certainty about their potential liability.

The Department and the Policy Council are grateful to Deputy Charles Parkinson who chaired a working group to bring these proposals to the States as quickly as possible. The Department would also like to thank those members of the Association of Guernsey Banks who gave up their valuable time to work with the Department on developing these proposals and GFSC for their invaluable help and initial research.

The Guernsey Banking Deposit Compensation Board has been appointed by the Commerce and Employment Board and comprises:

Charles Tracy – Chairman

John Lee – Deputy Chairman

Steve Butterworth

Nigel Carey.

The appointment of the Board shall be laid before a meeting of the States as soon as possible and the Department intends to submit the Board appointments to the States at its January 2009 meeting.



Frequently Asked Questions

Which banks are covered by the scheme?

The scheme covers all banks licensed by the Guernsey Financial Services Commission under the Banking Supervision (Bailiwick of Guernsey) Law, 1994. Brands of banks, such as the NatWest brand operated by the Royal Bank of Scotland International, are not licensed banks in their own right, but are instead covered under the scheme by the banking licence of their operating bank. Both the operating bank and its brand are therefore classed as one licensed bank for the purposes of the scheme. The list of licensed banks is available at the Guernsey Financial Services Commission's website, gfsc.gg.

I have an account with an internet bank operated in the Isle of Man – am I covered?

No. The scheme only covers banks licensed by the Guernsey Financial Services Commission. If you bank online with a bank that is not licensed by the GFSC then your deposit will not be covered by the scheme.

I have three accounts with my bank, are all of them covered?

The scheme protects up to £50,000 per person per licensed bank. If a person has more than one account with a bank then deposits in all of those accounts will be covered to a maximum of £50,000.

I have a joint account with my partner, how is that covered by the scheme?

The scheme is per person per licensed bank, therefore the holders of a joint account will be entitled to up to £50,000 in compensation each, i.e. total compensation of up to £100,000.00

I have an account that I operate for my child, is that covered?

Yes. Accounts held on trust for the benefit of children are covered by the scheme.

I am a small business person who has a personal account and a company account, is my company account covered by the scheme?

No. Accounts held by companies, trusts or other business accounts are not covered by the scheme. Only individual retail depositors are covered by the scheme.

I live in Alderney, am I covered by the scheme?

As long as you bank with a bank licensed by the Guernsey Financial Services Commission you will be covered by the scheme.

Why is the States guaranteeing the first £20million?

The States in not guaranteeing the first £20million, instead the States is providing liquidity. Any money called from the States to cover the losses of the captive (a special insurance company established for the purpose) will be recouped from the banks over time. The scheme is a bank funded scheme, the States will simply provide liquidity if necessary.

from

So Landsbanki clients have not been compensated


DISGUSTING