CityWire

MPs: FSA left consumers exposed to 'worst scandals' in UK history

Posted 21/01/2013 - 20:46 by anrigaut

2013-01-21 (All day)

MPs have slammed the Financial Services Authority (FSA) for ‘failing consumers’ and warned the incoming chairman of the new regulator that he must do better.

A report by the Treasury Select Committee has laid out the failings of the FSA which it said ‘left consumers exposed to some of the worst scandals in UK financial history’. ...

... The Committee goes on to criticise the board of the FSA, which includes recently knighted chief executive Hector Sants, for failing in its oversight of the organisation. ...

Related article: Should the financial regulator be fined for its mistakes?
http://www.citywire.co.uk/money/should-the-financial-regulator-be-fined-...

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IoM finance Director John Spellman Speaks

2009-06-19 07

John Spellman, director of Isle of Man finance, has had a tough year with the collapse of Icelandic-owned Kaupthing Singer & Friedlander (KSF) bank dragging him into an international spat and bitter row over compensation.

The former HBOS Financial Services boss applied for his first job on the Isle of Man over 15 years ago, mistakenly thinking it was one of the Channel Islands.

‘I had thought the Isle of Man was a Channel Island and had accepted the job,’ he said. ‘Obviously my geography was corrected sooner rather than later but I have never looked back.’

Turbulent times
Just a year into the government post in October 2008, Spellman was forced to deal with the collapse of Kaupthing Singer & Friedlander Isle of Man (KSF IoM) – making his job of developing the island’s financial services sector and economy far harder.

Since then Birmingham-born Spellman has been on the frontline fighting the crown dependency’s corner and designing a scheme of arrangement to repay depositors of the failed bank.

Spellman admits feeling ‘frustrated’ and ‘disappointed’ that the depositors voted against the Manx government plan to slowly wind down the bank’s assets.

‘I would have definitely taken an underpin at 70p in the pound [offered by the island’s government to depositors],’ said Spellman.

The Isle of Man Depositor Compensation Scheme is ready for its first test and will begin making payments to depositors in August, said Spellman.

Still a case for offshore investing
The impact of the KSF collapse is still being calculated but in the first quarter of this year
£1.2 billion of deposits flowed from the island’s total bank deposits of £56 billion. Despite this Spellman thinks there is still a convincing case for offshore investing and the Isle of Man.

‘It should not be unexpected that there would be flows in and out of any economy and during the period the flows to and from the UK have been huge,’ said Spellman. ‘We see it as a positive thing, that a single quarter has shown a minor reduction is not a concern.’

The lack of protection for deposits made through offshore bonds does not outweigh the tax planning advantages still on offer, he claimed.

Is it safe?
Investors have questioned the level of financial supervision on the Isle of Man following the collapse of KSF and before that the traded life settlement company Shepherd Select Funds in 2004.

Spellman said the International Monetary Fund (IMF) had praised the Isle of Man for having a ‘high quality’ supervisory regime.

‘We are keen to demonstrate the product of the IMF visit,’ said Spellman adding the IMF report would be published later this year.

The draft report praises the island for its financial stability and supervision, although the IMF team visited before the collapse of KSF IoM.

Spellman also expected a positive response from the Treasury-sponsored Foot Review of the regulation and stability of offshore financial centres.

‘We welcome the Foot Review because it gives us the ability…to prove we are stable, have a strong regulation and international responsibility to maintain transparency.’

Uncomfortable questions for the FSA
Picking through the wreckage of KSF IoM, Spellman has some questions for the Financial Services Authority (FSA) – namely why it warned the Manx regulator about the problems surrounding Bradford & Bingley but not KSF.

‘With Kaupthing there was no pre-notification by either the FSA or the UK government,’ he said. ‘This will be subject to the inquiry on the Isle of Man and we would like to know why that circumstance was different.’

KSF IoM is believed to have collapsed because it lost control of the assets it had ‘up-streamed’ to its UK sister bank, which was then put into administration by the FSA.

Budget boost
A three-minute commute on the IoM would probably get you reasonably far. But this little island in the middle of the Irish Sea has drawn the attention of some of the world’s most powerful people.

The island has already been added to the tax evasion watchdog’s white list of compliant jurisdictions and Spellman thinks the rules could get even tighter.

He believes countries could be pushed to automatically share tax information whereas now details are only released on request.

The decision to bring forward the Foot Review of offshore financial centres to September ahead of the next G20 meeting in Pittsburgh could also spell big changes for jurisdictions.

But the Isle of Man can still benefit from recent changes to UK non-domicile taxation and the introduction of a 50% income tax band for those earning over £150,000, and the confirmation that it is not a tax haven.

‘When you put basic rates up to 50%... you don’t gain tax revenue you displace them into other locations,’ he said. ‘It is our policy not to chase that business but we are seeing a natural magnetic pull.’

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The truth about cash in offshore bonds

Posted 02/06/2009 - 10:28 by mikepapa

2009-06-01 21

I'm grateful to my colleague Iain Martin for finally pushing the issue of cash in offshore bonds out into the open.

The collapse of Kaupthing Singer & Friedlander last autumn revealed the shocking fact that cash deposits held through offshore bonds do not enjoy the protection afforded to either unit trusts held through bonds or offshore deposits accessed directly........ continues

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The truth about cash in offshore bonds

Posted 02/06/2009 - 10:28 by mikepapa

2009-06-01 21

I'm grateful to my colleague Iain Martin for finally pushing the issue of cash in offshore bonds out into the open.

The collapse of Kaupthing Singer & Friedlander last autumn revealed the shocking fact that cash deposits held through offshore bonds do not enjoy the protection afforded to either unit trusts held through bonds or offshore deposits accessed directly........ continues

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iom proposes £10000 for Kaupthing Savers

Posted 30/01/2009 - 21:57 by paulcuthbert

2009-01-29 14

I have been sent this link by a FA in the UK. Msot probably been seen alreacy but I thought I would post it ! Nothing really we dont already know

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Question at today’s House of Commons Treasury Committee from Graham Brady MP

Posted 15/12/2008 - 21:36 by mikepapa

2008-12-15 21

Sants says clients could sue IFAs over Iceland saga

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Kaupthing IOM savers plan legal action

2008-11-14 (All day)

Customers who have savings with Kaupthing Singer & Friedlander in the Isle of Man (KSFIOM) have sought legal representation to try and recover their deposits after weeks of failed negotiations with the company.
The KSFIOM action group said that depositors feel ‘abandoned’ by the government following Chancellor Alistair Darling’s decision not to protect UK savers in the Isle of Man.
It is also angry that negotiations with provisional liquidator Mike Simpson have so far proved fruitless.
As such, the group has appointed lawyer David Greene of Edwin Coe to draw up plans for legal action as a last resort.
‘While certain parties in the UK are receiving reassurances about their money, depositors in KSFIOM have heard nothing to give them hope in this matter,’ the group said. ‘The depositors are frustrated by the lack of communication from Mr Simpson and now plan to explore various legal routes to ensure that their interests are being upheld.’
It added: ‘With many facing financial destitution and lives left in ruins, it appears that legal action may be one of the few options left open to them.’

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Manx govt to 'run down' Kaupthing IoM to avoid compensation trigger

Posted 06/11/2008 - 16:17 by steveejeb

2008-11-06 (All day)

The Manx government is working on a scheme to ‘run-down’ Kaupthing Singer & Friedlander rather than let the bank go into liquidation which would trigger compensation payouts to the savers who have £821 million on deposit with the failed Icelandic bank.
The Manx government’s chief minister Tony Brown has set up a committee that will develop a plan to either restructure KSF IoM for sale or run it down in an ‘orderly’ fashion to avoid liquidation.

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Adviser anger over Ailo claim about Iceland accounts

2008-11-05 (All day)

Financial planners have reacted angrily to Association of International Life Offices’ claims that they were ‘blind’ to the risk of offshore bonds linked to Icelandic bank accounts.

Ailo chairman Allan Morgan-Moodie last week told New Model Adviser® that it was ‘quite disingenuous’ of advisers to say they were unaware of the lack of policyholder protection in offshore centres in the Channel Islands and Isle of Man.
Minesh Patel of London-based EA Financial Solutions said life companies were trying to distance themselves from the scandal caused by the collapse of Iceland’s Landsbanki and Kaupthing banks. Offshore bonds were just the latest problem – like endowments and with-profits – for which life companies put the blame on advisers, he said.

‘We haven’t the resources to do due diligence on banks,’ said Patel, who has two clients with almost £400,000 in Kaupthing Singer & Friedlander Isle of Man through offshore bonds.

Etc etc

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Darling promises review of Isle of Man tax haven status

Posted 04/11/2008 - 13:17 by Mandy_Italy

2008-11-04 (All day)
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