Exchange rate variance

  • t1grm
  • 13/10/08 31/05/09
  • unspecified
  • Offline
Posted: Tue, 02/06/2009 - 09:59

My KSF IOM company account was in EUR. I have since opened a new company bank account also in EUR. I have received two payments under the early payment scheme. However, since the IOM treasury has used the GBP to EUR ex rate as of 9th October 2008 and my new bank is applying the current market spot GBP to EUR ex rate on the date of the transfer I have incurred an exchange rate variance of more than 12% of the balance of my KSF account.

I have contacted the IOM treasury about this and they say I should have specified a GBP bank account for the compensation payments to be made to. This solution would have been no good to me because the GBP payments would still have been made based on the 9th October 2008 exchange rates and since I do not operate in GBP I would have had to convert the payments into EUR at some point at which point I would still incur an exchange rate variance.

I feel that the exchange rate variance is being unfairly passed onto me. I was holding EUR so I expect the same amount of EUR back. Not a GBP equivalent which is worth 12% less than it was in October 2008. I do not operate in GBP and have no interest in holding funds in GBP so why should I have to front the cost of an exchange rate variance?

Has anyone else been hit with a huge exchange rate variance under the early payment scheme and will we be entitled to claim for the variance under the standard compensation scheme once it starts?

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EPS Exchange rate problem

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
  • Offline
  • Tue, 02/06/2009 - 10:46

I think Mike Simpson is the best person to ask about this issue
This problem was the reason many FOREX depositors avoided the EPS like the plague. Also remember the IOMG initially proposed 8 Oct as the exchange rate calculation date for their SOA. As the SOA, the EPS was clearly a scheme designed to accommodate the small local IOM £ saver at the expense of the “outsiders”.
With regards to your problem then as I have understood it there was going to be a reconciliation of this once the SOA was initiated and to my mind this is also the case in the liquidation as the total value of your original deposit at 8 of Oct should be re-calculated in £ based on the exchange rate of the day of liquidation. If I am wrong about this and this does not happen and indeed the EPS is subtracted based on the £-Euro rate of 8 Oct before the balance calculation then the IOMG and potentially the other £ creditors could end up as the beneficiaries of the exchange rate fluctuation as there will be more £ left in the pot.