The Isle of Man can only offer a 'piggy bank' service up to £20k

Posted 18/09/2009 - 10:58 by Lucky Jim

As a consequence of the successful progress of the DON'T BANK ON THE ISLE OF MAN campaign there has been a sudden response by way of anonymous comments from the IoM to several of my blogs posted over the past 4 months.

Reproduced (below) is my latest blog posted in response to an anonymous comment to an earlier blog:'Depositing in the IoM could seriously damage your wealth'.

The IoM boasts itself as a world leader in the offshore financial market, having a triple AAA credit rating & a budget surplus that is required by statute. Nevertheless it does not have the financial infrastructure in the form of a bank of last resort or a corporate commitment by its banks to underwrite the liquidity of one of its members in the event of there being a run on it.

The IoM boasts having a strong regulatory framework underpinning the conduct of banking business on the island. The government says that KSFIOM was "a one-off" incident. That being the case the government & the banks should have great confidence in the stability of the banking sector to withstand the chill of a recession, and had there been a mechanism in place to cope with the sort of crisis that hit KSFIoM - a crisis that the FSC was party to & capable of handling rather than simply resorting to withdrawing the licence - KSFIoM might still be operating today. Certainly 11,000 people would not have lost everything on 9 October 2008.

It is not good enough to simply say that the IoM with a population of 80,000 can not have a bank of last resort. You can not have your cake & eat it. If the IoM is to be a leading trustworthy offshore financial centre then it has got to be able to offer depositors from around the world the assurance that their life savings are safe on the island. This is a Crown dependency & if necessary it should have the backing of the Bank of England, and preferably have its banks regulated by the UK.

Hitherto the IoM had no problem in allowing people with £50k ++ to deposit on the island. Now post KSFIoM there is a problem, & the seriously flawed compensation scheme will only cover deposits up to £20k from October 2009. On present form - unlike the UK FSCS - it will be up to 12 months before compensation is paid.

Depositing in the IoM is no longer the best option for anyone looking to deposit a substantial sum from the sale of a house, an inheritance or a life's accumulated savings intended to provide for one's 'golden years'.

On its own admission from October the IoM can now only operate a 'piggy bank' deposit service up to £20k. That in itself is good enough reason why millions of people around the world would not consider depositing on the Isle of Man. There are at least 15 other reasons that readily come to mind for not doing so.

My 'tweet' for today on Twitter links to the same article:
The Isle of Man can now only offer a 'piggy bank' service up to £20k

If you are on Twitter feel free to copy it a repost it as your 'tweet'

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