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IFA
Did the IFA provide you with advice on this matter, rather than on an execution only basis?
If so did their advice letter tell you about the counterparty risks involved in a PPB?
Did they advise you about the well known risks of Icelandic banks in the months prior to this event.
If they didnt then they may be liable; IFAs will have professional indemnity insurance, and there is a financial ombudsmen service that can handle complaints.
deposit through offshore bond wrappers
..
Essentially you have no
Essentially you have no protection with an offshore bond. They are corporate deposits and therefore not covered under the DCS, if your an IFA you should have checked the position before investing client monies because corporate deposits / bond investments have never been covered under the DCS here. The policyholder protection act only covers you if the insurance company goes bust, in this case the insurance company is not bust its just that you instructed the insurance company to take out a deposit in a bank that went bust. You need to speak to the life company concerned directly.
Offshore bond wrappers
The situation is different only in that the compensation scheme is applied to the insurance company giving the wrapper as opposed the individual bondholders. The compensation will obviously be a lot less in that sense if it comes to that but the other side of is that you may have some recourse against the insurance company as they will have had a panel of providers and inclusion on that panel could infer a reccommendation. You may also have some recourse against an adviser if there were any involved.
Offshore Bond Wrappers
I attach below an email to Royal Skandia and their reply - IMHO the question of compensation still appears to be a grey area and I can't understand why offshore bond providers already seem to be throwing in the towel and accepting that their policyholders will not be covered.
In terms of KSFIOM accounts being made available by offshore bond providers, I doubt you have any recourse against the insurance company. Especially as it has today been revealed that the Audit Commission (their job is to ensure that public spending provides "value for taxpayers") has £10M tied up in Icelandic banks!
Also, we all need to bear in mind that while compensation eligibility is still very important, the level of recovery proceeds are also an equally important factor in this mess.
Anyway, this was my email to Royal Skandia
"Dear Sir/Madam
In the recent letter from Mark Halewood to policyholders, he makes the following statement;
"In line with the terms of your contract, where you have chosen to invest in deposits held with KSF (IOM) as an asset within your portfolio bond, the deposits are held by, and in the name of, Royal Skandia and are therefore deemed as a corporate investment. As such the Isle of Man Depositors Compensation Scheme does not cover these specific deposits."
However, the Compensation of Depositors Regulations 2008 that are available for download from the FSCs website states at 10. (3) that "compensation shall only be paid to depositors who are individuals beneficially entitled to the proceeds of the deposit, subject to paragraphs (4) and (5)".
Surely, individual offshore investment bond policyholders where the product provider has made a deposit within the structure of the bond are "beneficially entitled to the proceeds of the deposit"?
Please can you provide clarification on this as a matter of urgency and explain why my interpretation of the compensation scheme is different from yours?
Also, can you confirm whether all offshore investment bond providers are lobbying the Isle of Man Government to make sure that deposit accounts held within offshore investment bonds are included within the compensation scheme? Without such compensation, in future, I feel that many financial intermediaries may be reluctant to continue recommending your products.
Thank you for your assistance in this matter."
And this is the reply from Royal Skandia
"Dear Mr *****
Thank you for your below mail concerning the letter from Mark Halewood.
It is true that the wording of the Compensation of Depositors Regulations 2008 which came into operation on 9th October 2008 is not completely clear on the issue of who is and who is not entitled to compensation under this scheme. However, we have contacted the Financial Services Commission directly and they have confirmed that corporate entities are not covered.
I can assure you that all the providers on the Isle of Man are concerned about the present situation and will doing their best on behalf of their clients to ensure that their interests are represented.
Should you have any further queries please do contact us.
Customer Helpdesk
Royal Skandia Life Assurance Limited"
They have changed their name to Royal Scandalous !!!!
Their happy to take your money through iFAs where are they all now I ask !!
Offshore Bond Wrappers
As far as I know its not a grey area. As I understand it the assets of the life company belong to them, they have nothing to do with the policyholder so there is no beneficial interest. Its a totally separate legal entity from the policyholder (who holds rights under the policy but not the policy assets themselves). Don't get too worried I'm sure there might be some form of change or resolution but at the moment that's how it stands.