KSF thread closure on Manx Forums

Posted 13/08/2009 - 11:43 by Anonymous

This is the draft of the post I made on the KSF megathread on manx forums shortly before it was closed. I've only just discovered a message from bellyup in my spam folder that the moderator of the thread may have been John Williams. I'll leave the conspiracy theorists to draw the obvious conclusion.

KSF Myths Busted

1) We didn't read the small print in the brochure.
I have a copy of the brochure in front of me. There's only one piece of small print. Its on the back cover and it reads "Licencsed by the Isle Of Man Financial Services Commission to conduct Banking and Investment Business. Authorised and Regulated by the Financial Services Authority for UK Mortgage Business Only".

2) KSF was a High Risk Bank
The FSC didn't think so unless it broke its own rules.

This paragraph comes from http://www.lawandtax-news.com/html/iom/jimlatolaw.html
The licensing policy that the Commission adopts for the banks is based upon the fact that the Island has no lender of last resort and is [i]too small to shoulder high risk[/i] (my emphasis), or start-up, operations. Thus, licences are only issued to subsidiaries, or branches, of existing banks licensed in jurisdictions which subscribe to the international concordat on banking supervision. Applicants must have an established track record of at least five years' profitable operation and the ownership and management approved. All beneficial interests of 5% or more must be disclosed. In addition, the Commission requires the written consent of the licensing and supervisory authority from the bank's own jurisdiction.

Again from the Brochure "Not only are deposits held with Kaupthing Singer & Friedlander in the Isle of Man covered by the Depositors Compensation Scheme contained in the Isle Of Man Banking Business (Compensation of Depositors) regulations 1991, all deposits, including those of Derbyshire Offshire clients, are also fully guaranteed by Kaupthing Hf - with this guarantee customers have peace of mind that their savings are fully secured."

At the time KSF started to operate on the IOM the DCS was only up to 75% of 20K. No wonder the FSC was happy for this information not to appear in the brochure. How many of all the apparently savvy IOM residents on this forum had more than 1 account with 15k or less in each one before October last year? Opening 10-20 bank accounts for the proceeds of the sale of a house for instance is not very practical.

Either the FSC considered KSF high risk, ignored its own rules and didn't bother to tell anyone or it didn't consider KSF high risk.

In light of comments made by certain officials about non core banks and risk by when did the IOM start accepting high risk banking operations? Why doesn't this information appear in the brochure if KSF was considered a high risk by the FSC? I presume FSC and/or the IOM Office of Fair Trading has certain standards about what appears in documents used to sell bank accounts.

In fact the brochure doesn't use the word "risk" once. Bit of an oversight the FSC consented to (knowingly or not)

3) The Interest Rate Myth
Then there is the myth that KSF paid exceptionally high intrest rates. This simply is not true. When Derbyshire was taken over I had a Base Rate Tracker account (base rate + .35%) the account was transferred to Kaupthing and operated on the same basis. I later changed the account to a higher intrest account (but it was no higher than other high intrest rate accounts with other banks on the IOM) rather than having the hassle of opening an account at another institution.

Early in this forum a certain John Williams calls us greedy, was that for wanting our property back or depositing with a licensed bank that paid the same interest as other licenced banks on the IOM?


Your rating: None Average: 5 (17 votes)