3.5.6 of the IOM's affidavit to the TSC

  • SgKZ
  • 10/10/08 31/05/09
  • a depositor
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Posted: Wed, 04/02/2009 - 16:37

3.5.6. of the affidavit says,

All authorised institutions are required to provide details of the various
compensations schemes within their literature to ensure that depositors /
investors are familiar and cognisant of the protection regimes in place.
The Isle of Government prides itself both on its quality of financial regulation
and on the responsible stance it takes to consumer protection. It contends
that UK citizens can invest in the Isle of Man with confidence.

Questions that I would like to float are the following:

1) What is the exact requirement?
2) What was mentioned specifically in any of the KSF literature?
3) Is the literature required to outline such things as it being an unfunded scheme?
4) Does the literature mention likely timescales of payout?

I don't have any of the literature to hand so I cannot check for myself, but my recollection is that the DCS gave me a warm fuzzy feeling of security as I wasn't likely to keep more than 15k in it . Little did I know that it was no more than an open-ended I.O.U.

SG

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If I remember correctly the

  • expatfrance1
  • 15/10/08 31/05/09
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  • Wed, 04/02/2009 - 17:02

If I remember correctly the banks literature just said something pretty general about being covered by the IOM DCS and then told you to go to the FCS web site for further details.

It was only when I did that I saw the statement that the DCS only collected levies from banks after a financial institution had collapsed, and that it could take 'some time' to make payments from the scheme that I started to panic. By which time it was too late.


Hmmm

  • SgKZ
  • 10/10/08 31/05/09
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  • Thu, 05/02/2009 - 08:51

So, it would rely on you going to a website to get the real picture. You shouldn't be able to advertise a positive aspect without detailing the more than relevent negatives or weaknesses. Especially when those weaknesses would only run to two lines,

"Your deposit is covered up to £20k by the IOM DCS. The DCS is unfunded and could take years to pay you back."

Not quite such a draw is it that one?

So, whose idea was it to be economical with the truth?


Take your point SKGZ

  • DonaldC
  • 25/11/08 31/05/09
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  • Thu, 05/02/2009 - 09:37

Take your point SKGZ, but not sure where you are going with this one.

There is no suggestion that those who had <15k in their accounts will not get paid out in full.

And if they don't then presumably its because the IoMG doesn't have the money, so there's noone to make any claim against.

If the payments are made, the only option might be to claim loss of interest on the 15k due to the delay, but are you really going to start an action for that?


3.5.6 of the IOM's submission to the TSC

  • manx-person
  • 17/10/08 31/05/09
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  • Wed, 04/02/2009 - 17:00

In respect of the requirement (point 1) - this was covered in the Banking (General Practice) Regulatory Code 2005 in paragraph 61.

(1) A bank shall not issue an advertisement which states or implies that any deposits or interest will be guaranteed, secured, insured or the subject of any form of protection (other than that provided by the Banking Business (Compensation of Depositors) Regulations 1991) unless it states:-

(a) the form of the protection;

(b) the extent of the protection; and

(c) the full name of the person who will be liable to meet any claim by the depositor by virtue of the arrangements conferring the protection.

(2) All advertisements issued by a bank which is not a participant in the Depositors Compensation Scheme, as indicated by the schedule to the Banking Business (Compensation of Depositors) Regulations 1991, and which refer to its banking business or contain an invitation to make deposits shall state that the bank is not a participant in the Depositors Compensation Scheme. Such a statement shall appear in a prominent position.


MP

  • SgKZ
  • 10/10/08 31/05/09
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  • Thu, 05/02/2009 - 08:58

Thanks for your reply. You are more than conversant with the rules and regs. Does my bold highlighting below mean that if you advertise yourself under the DCS banner, you are exempted from providing such things as mentioned in a, b and c?

Do the 1991 regs have any special provisions as to what the banks are required to advertise if 'selling' the advantages of the DCS?

(1) A bank shall not issue an advertisement which states or implies that any deposits or interest will be guaranteed, secured, insured or the subject of any form of protection (other than that provided by the Banking Business (Compensation of Depositors) Regulations 1991) unless it states:-

(a) the form of the protection;

(b) the extent of the protection; and

(c) the full name of the person who will be liable to meet any claim by the depositor by virtue of the arrangements conferring the protection.

(2) All advertisements issued by a bank which is not a participant in the Depositors Compensation Scheme, as indicated by the schedule to the Banking Business (Compensation of Depositors) Regulations 1991, and which refer to its banking business or contain an invitation to make deposits shall state that the bank is not a participant in the Depositors Compensation Scheme. Such a statement shall appear in a prominent position.

Thanks.


DCS/guarantees

  • manx-person
  • 17/10/08 31/05/09
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  • Thu, 05/02/2009 - 09:09

Does my bold highlighting below mean that if you advertise yourself under the DCS banner, you are exempted from providing such things as mentioned in a, b and c?

No - As I read it, if any form of protection is disclosed (other than the DCS) then the requirements of (a) to (c) apply.

It would appear that the purpose of this regulation is to ensure that if a 'guarantee' is mentioned it is correctly disclosed. An instiution would not be 'obliged' to disclose for example a parental guarantee, but if it did it must comply with the disclosure rules

I am not sure as to whether there is any specific requirement to mention whether you are a member of the DCS scheme, but I haven't fully researched this