Funds Held Via Toyal Skandia

  • gazfuk
  • 12/10/08 31/05/09
  • unspecified
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Posted: Thu, 30/10/2008 - 15:11

Having just read the most recent information on the Isle of Man Financial Services Commision, I am more convinced than ever that people like me, who got involved with KSF IoM via 'wrapped' funds with an insurance/pension scheme are unlikely to get their money back. Unless I am missing something, we are at the end of a very long list of creditors, notwithstanding our personal circumstances.

Does anybody see things differently?

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Reply from Royal Skandia - Not Our Problem

  • gazfuk
  • 12/10/08 31/05/09
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  • Fri, 14/11/2008 - 08:33

Dear XXX

Thank you for your e-mail dated 31 October 2008. Please accept my apologies for the delay in replying to you.

The letter you are referring to was dated 6 October 2008. In the circumstances it may be helpful if I explain the type of letter it was and why we issue them.

Royal Skandia allows people to invest in a variety of different funds and bank accounts. Royal Skandia does not conduct any due diligence on investment choices made by fund advisers or bond holders, neither does it comment on their suitability. It is the responsibility of the financial adviser and or bond holder to conduct due diligence on any investment they make.

Royal Skandia does have administrative requirements and procedures which need to be met before an investment can be accepted. This in no way implies a judgement of the investment. Royal Skandia’s administrative requirement for bank deposits is that the bank has a Fitch credit rating of A classification or higher.

If Fitch downgrades a bank from an A to B rating Royal Skandia, for information only purposes, advises financial advisers whose clients hold accounts with the bank of this. Because the bank no longer meets Royal Skandia’s administrative requirements this has an effect on accepting new deposits and in administration of existing deposits. These letters are not unusual and in the past six months identical letters have been sent from Royal Skandia regarding Bradford and Bingley and Irish Nationwide.

The three month fixed deposit was rolled over automatically on 2 October 2008 as per Royal Skandia’s usual procedures. I have attached a copy of the confirmation advice sent to your financial adviser on 2 October 2007, the date the investment was originally placed. You can see that we advise that unless we receive instructions to the contrary that the investment will be re placed i.e. rolled over. I have blacked out your account number on the confirmation as this e-mail is not encrypted. If you want a copy showing your account number please let me know and I will post one to you.

If the Liquidator is not able to retrieve enough assets to cover the banks liabilities the Isle of Man bank deposit compensation scheme would come into effect. Under the terms of the scheme business and corporate accounts are treated differently from individual accounts. Business and Corporate accounts will receive a maximum of £20,000.00. All assets held within a bond, whether funds or bank accounts, are held in the name of Royal Skandia not in the name of the individual; this means that the Isle of Man bank deposit compensation scheme will pay a maximum total amount of £20,000.00 to Royal Skandia. This would be divided between affected bond or plan holders.

Royal Skandia will not be offering any compensation to bond holders who elected to hold Kaupthing Singer and Friedlander accounts. However, I can assure you that Royal Skandia will do everything possible to pursue the liquidator to obtain the maximum amount possible for our bond holders.

Royal Skandia's pre-sale literature contains an explanation of the scheme which would apply should Royal Skandia become insolvent. I have attached a copy of the pre-sale brochure titled "Why invest in an EIB" and also a copy of a leaflet titled "Why choose the Isle of Man." You will note that Royal Skandia does not provide information about compensation schemes which may apply to funds or bank deposits. Royal Skandia would expect this information to have been obtained by the client and/or their financial adviser as part of gathering due diligence information prior to making investments within the bond.

You make reference in your letter to Royal Skandia’s claim to offer “unrivalled protection”. This statement refers to the protection offered to our policyholders in the unlikely event that Royal Skandia became insolvent. I feel that a full explanation of this protection illustrates this.

Royal Skandia is a reputable company regulated and licensed by the Isle of Man Insurance and Pensions Authority. The relevant Isle of Man regulations are the Isle of Man Insurance Act 1986 and Financial Supervision Act 1988, Life Assurance (compensation of policyholders) Regulations 1991.

Contained within the Isle of Man Insurance Act 1986 is a section which specifies all licensed insurance companies must maintain a long term business fund in which assets are held to meet liabilities arising under insurance policies issued by the life company. Put in its simplest terms liabilities means monies due to policyholders at the maturity of their bonds or if they wish to surrender or take withdrawals from the bonds. The Act requires that Royal Skandia at all times keeps its policyholder accounts segregated from its general accounts. The assets held in this fund can only be applied for the purposes of meeting liabilities of the policies issued by Royal Skandia. It cannot be used for any other purpose. What this does is to ensure that in the unlikely event Royal Skandia became insolvent there would be sufficient funds available to pay our bondholders.

As an additional safeguard there is also the Financial Supervision Act 1988, Life Assurance (compensation of policyholders) regulation 1991. This act ensures that should an Isle of Man licensed life company become insolvent, and unable to meet its policyholders liabilities, a levy is raised from the remaining life companies and the proceeds of the levy are used to pay up to 90% of the value, less existing contractual charges, of the policyholder’s bond.

Copies of the full act and regulations plus an extensive question and answer section can be found on the Isle of Man Insurance and Pensions Authority website http://www.gov.im/ipa/

Neither of the above cover the value of investments held within the bond. The risk of investments falling in value or of a fund failing is borne by the bond holder.

I cannot comment on the advice you received from your financial adviser prior to you choosing to decide to invest in the Executive Investment Bond. Financial advisers are independent advisers who represent people such as you, their client. Based upon any meetings and consultations which a financial adviser has with their client, they should be in a position to recommend the most suitable product for their client’s needs and circumstances. As I hope you will appreciate because there were no employees from Royal Skandia present at the pre-sale consultations and meetings you may have had with your financial adviser, it would not be appropriate for me to provide opinions on how you feel the Executive Investment Bond was presented to you. If you feel the information and advice they provided was inadequate you must raise this matter with them.

If I can assist you further please contact me.

Yours sincerely

Miss Christine Edge


Skandia - bond

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Fri, 14/11/2008 - 08:46

Your best chance of recourse is to your IFA.
There is a Financial Ombudsmen scheme which provide a non-legal method for the resolution of disputes.
I would suggest you investigate making a claim under the ombudsmen scheme


Skandia/Aifa AGM/dinner protest?

  • skint
  • 20/10/08 31/05/09
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  • Wed, 12/11/2008 - 12:31

Hi all,

I came accross this news item:-

Economic Secretary Ian Pearson MP will be the keynote speaker at the Association of Independent Financial Advisers (Aifa) AGM and annual dinner later this month (November).....

...This year's event, sponsored by Skandia, will be held at the Merchant Taylors' Hall in the City and the Aifa chairman the Rt. Hon John Gummer MP will preside over the dinner.

The evening will take place on Wednesday 19 November.

http://ftadviser.com/FTAdviser/Advisers/Industry/TradeAssociations/News/...

Given the silence from Skandia, that it is "business as usual for them", the link for investors into KSF IOM has been removed from their web site (http://www.skandia.co.uk/) and performance factsheets, and their compensation FAQs (http://www.skandia.co.uk/stock_market.asp#question3) have been updated to (sort of) clarify that we are not entitled to anything SHOULD WE ORGANISE A PROTEST at this event?

Let me know your thoughts.


Skandia sponsored event

  • chb
  • 10/10/08 15/10/09
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  • Wed, 12/11/2008 - 19:47

We could also do some lobbying of the keynote speaker, Mr Pearson, beforehand on the content of his speech to Mr Gummer and the AIFA...

The IFAs have a strong interest in the well-being of their clients and in having a well run and predictable financial industry. I know it'll be getting close to d-day but encouraging the IFAs to collectively represent their clients interests (in an unprecedented hour of need) more effectively may still help us


skandia

  • mrp1
  • 01/11/08 31/05/09
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  • Wed, 12/11/2008 - 19:34

"Given the silence from Skandia, that it is "business as usual for them", the link for investors into KSF IOM has been removed from their web site (http://www.skandia.co.uk/) "

Try visiting the correct website would be my first thought - www.royalskandia.com . The message is still there


Why not?

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Wed, 12/11/2008 - 13:45

As long as its orderly and polite I see no reason why not.

It only need two people with sandwich boards on the street outside nothing even needs to be spoken

What exactly have we got to lose? ( 550 million)

How many would be able to go?


Well I'm up for it

  • skint
  • 20/10/08 31/05/09
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  • Wed, 12/11/2008 - 17:06

any other takers?


oops - fixed story link

  • skint
  • 20/10/08 31/05/09
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Skandia/Aifa AGM/dinner protest?

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Wed, 12/11/2008 - 13:10

Most strange - page can not be found message,,,

never mind just Skandia - even getting a go at Pearson could be worth it.


Skandia Dinner protest

  • mortobri
  • 20/10/08 n/a (free)
  • a depositor
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  • Wed, 12/11/2008 - 12:52

Interesting suggestion, but my funds were with "Royal Skandia", so Skandia mught just say "nothing to do with us"!
One could question each companies parentage (in a financial sense), I do not know if they roll up into a Skandia Group?

Meanwhile I shall continue to monitor this site with some hope that there is a resolution to this mess.


no guarantee

  • ripped Off
  • 20/10/08 31/05/09
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  • Tue, 04/11/2008 - 13:38

I was under the impression that if you held a bond with Skandia you were not covered under any financial scheme, does anyon else know???????????


"At the end of a long list of

  • cold-dose
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:04

"At the end of a long list of creditors" isn't really a true representation of the situation.

There will be some limited preferential creditors near the front of the queue, and possibly some secured creditors, who will be able to remove whatever it is their loans were secured against.

Then there's the costs of the liquidator in managing the process.

The vast majority of creditors are all pooled together as 'unsecured creditors', and will share equally (proportional to money owed) in the money that's recovered.


At the end of a long list of creditors

  • gazfuk
  • 12/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:15

cold-dose, thanks for the response. Are you saying that those with 'wrapped' funds are not disadvantaged as against direct investors in the event of a payout that is not related to the compensation scheme? If so, I am pleased to hear it. However, we are still disadvantaged if the compenstation scheme kicks in as we are not retail depositors so can't qualify for the £50,000 compensation. We will have to hope it doesn't come to that.


Yes, although you can't claim

  • cold-dose
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:47

Yes, although you can't claim on the compensation scheme (well, not in any meaningful way) there's no disadvantage in the liquidation process.


You do still get a fair share

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:19

You do still get a fair share of liquidation proceeds - at least I think you do, but then how does it work when you have to sign your deposit over to the FSC scheme before you can claim from the scheme?
I've just had a nasty thought, does that mean that the scheme will self subsidise with payouts from the liquidator first??


You do still get a fair share

  • Ally
  • 13/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:32

My understanding of the scheme is

If the scheme kicks in and payouts out before the liquidator recovers funds then the scheme can recover from the liquiadtor the funds paid out.

In number form. Lets say someone is owed £100k

Scheme kicks in and pays out £50k.

Liquidator then recovers £70k.
Of this £70k the liquidator pays the scheme £50k and pays the depositor £20k.

If the liquidator was to recover only £30k. This would all go to the scheme so the scheme would be £20k out of pocket. (And of course the depositor would be £50k out of pocket)

But yes lets say the liquidator recovers more than the scheme needed to pay out then the scheme recovers all its money and the only losers are depositors with more than £50k, or corporates and others with more than £20K.


Well it wouldn't be doing

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:42

Well it wouldn't be doing much then, apart from spreading it about, and in many instances depositor would be better saying "cobblers" to the scheme and just accepting the liquidators payout ( you don't have to agree to it).

It did seem that the seem was mutually exclusive and that we all got a bit, based upon our deposit, thus the biggest losers got the most out of the scheme, and the smallest losers ( value wise) got proportionally less, but you will note that the scheme has no worked examples, and just a note that if your agree, you sign your deposit over to the scheme.


Are you asking if - by

  • cold-dose
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:50

Are you asking if - by signing your deposit over to the compensation scheme - you potentially lose the part above £50k if the liquidator recovers more?

Because that's not how it actually works. They merely deduct any compensation payments you've had from your part of the liquidation proceeds. Any surplus gets passed on to you.

There is provision in the compensation scheme regulations for allowing the scheme to claw the money back directly, but they also get the debt signed into their name to make it legally easier to do this with people who live overseas (because then it's a civil debt, which is much more likely to be recognised in other countries).


FSC Scheme

  • Monkeyface3604
  • 10/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:28

The FSC will claim back all compensation payments from the liquidator, so in actual fact its a pile of sh%t, we are paying for our own compensation!!!
Then of course the FSC will look to claim all its fees as joint petioner out of it as well.....oh yeah and the liquidator will be looking for a few million as well.


You do still get a fair share

  • TheThurloSquire
  • 10/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:26

Yes payouts from the liquidator are deducted from the £50K so if you get £49K from the liquidator you are only entited to a further £1K from DCS.


No, that's not what I meant.

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:35

No, that's not what I meant. When you agree to accept compensation from the scheme, you also sign over your "deposit" to the scheme. Google it and have a read through yourself. This effectively means that the scheme holds funds that the liquidator may release, and we don't know yet how they pay them out, they may discharge the scheme's liabilities first.
Actually what you have said too is wrong, you get 50K or a portion of it depending on what your deposit was notwithstanding what the liquidator may release - I also thought that the scheme would reduce it's payout depending on what the liquidator released, but it doesn't, it is up to the level of your deposit , less a bit of this and that. For me, I know that I will get 50K plus what the liquidator releases, less a bit, then the scheme also has the power to apportion depending on the level of the deposit - of course that probably means I'll get bugger all, but it is the thought that counts.


Basically, if you get a

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
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  • Thu, 30/10/2008 - 17:44

Basically, if you get a payout from the compensation scheme then the first part of your liquidation proceeds will be diverted to pay that back.


Yes, so it ain't much of a

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:49

Yes, so it ain't much of a bloody scheme is it? methinks they won't be getting my signature until they have provided me with a worked example, assuming of course we have to go that far.

So perhaps we need to stress that the scheme is nothing other than a short term loan, and as such worthless?


If the liquidator pays out

  • cold-dose
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:52

If the liquidator pays out more than £50,000 then yes - it's just a short-term loan.

Of course, if you don't get that much back from the liquidator, then you do benefit from the compensation.


Which in the next confused

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:58

Which in the next confused breath is different to what we gleaned from the text of the DCS and legal advice taken by ...? which said that you get your 50 K or an apportion dependant on size of deposit, then your wedge of liquidation money.

Which one is correct? the scheme certainly requires that you sign your deposit over.


It's all here

  • TheThurloSquire
  • 10/10/08 31/05/09
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  • Thu, 30/10/2008 - 18:00

Yep and it is a hornet's nest

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 18:19

Yep and it is a hornet's nest of conflicts.

(4) The assets of the Fund shall be invested from time to time in such manner as the Scheme
Manager may direct, having regard to the need for prudence.

(They mean outside of the IoM)

(5) The Scheme Manager may borrow money or otherwise incur indebtedness, for the
purposes of the Scheme, in any way and on such terms as it thinks fit.

(but what about the interest??), whoops, here it is ....

(b) money required for the arrangement, service and repayment of loans obtained by
the Scheme Manager, or for the discharge of other indebtedness incurred for the
purposes of the Scheme;

And when will it start? well it should have already done so, save for the FSC being a joint petitioner....

(b) on the passing of a resolution for a voluntary winding-up in a case in which no
statutory declaration has been made under section 218 of the Companies Act 1931;
or

And what about this bit? if you have other holdings and live solely of the interest of those holdings, could this apply to you??

(10) For the purposes of this regulation, an individual is an "experienced investor" in relation to
a transaction of any description in an investment of any description if in any period of 12 months that
individual has so frequently entered into transactions of that description in investments of that description
with or through the agency of reputable persons who carry on regulated activities falling within Class 2 or
Class 3 of the Regulated Activities Order 2008, being transactions of substantial size, or of substantial
size in relation to that individual’s total wealth, that that individual can reasonably be expected to
understand the nature of every transaction within that description of transaction, of every investment
within that description of investment and the risks involved in entering into any transaction within that
description of transaction in any investment within that description of investment.

And of course I ma going to fall for this bit.....

(2) Notwithstanding any other provision of these Regulations, the Scheme Manager shall not
pay or determine to pay a compensation sum out of the Fund in respect of a liability unless the investor
has agreed that -
(a) its existing rights in respect of that liability, or in respect of any part of that liability
required by the Scheme Manager, shall vest in the Scheme Manager;


I'm afraid I don't understand

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
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  • Thu, 30/10/2008 - 18:31

I'm afraid I don't understand your objection to the first half of those points.

The bit about experienced investors makes it clear that there is a requirement to be making lots of transactions and that they can show that you ought to know what it is you are doing. The only people who I think are at risk from that provision are the likes of Royal Skandia.

As for the last clause, that needs to be read together with the others - yes, you might have to sign over your entire potential liquidation proceeds. No, they are not legally allowed to hold onto them.


Cold-dose regulations

  • manx-person
  • 17/10/08 31/05/09
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  • Thu, 30/10/2008 - 18:42

I think the references that are being quoted here are in respect of the regime for Authorised Collective Investment Schemes not Bank accounts
There is a separate compensation regime for CIS, but EIFS (or now QIFS/SIFS) are exclude from that compensation scheme as they are not authorised schemes as a seem to recall


That'd make more sense... I

  • cold-dose
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 19:06

That'd make more sense... I didn't recall reading anything about 'experienced investors' in the regulations, but I don't have them to hand at the moment.


Experienced investors could

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 18:37

Experienced investors could be construed as anyone having more than one account or who lived off the proceeds from any account?? I don't know, just thinking out loud, about the way this could be read.

No, they can't hold your proceeds, but they can distribute them as they see fit to start with.

Regarding the first bit , well a petition has been placed, why hasn't the scheme kicked in? It doesn't say that the petition has to be in itslef succesful, just that it has been made.


...and then you get the balance?

  • TheThurloSquire
  • 10/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:47

...and then you get the balance of the proportion allocated to you by the liquidator?


Yep, Great if the scheme has

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Thu, 30/10/2008 - 17:52

Yep, Great if the scheme has funds, but since it is how to say, potless, then we all pay in, then we all get out, less of course what the smaller depositors get extra pro-rata to the bigger depositors. Well forget that for a game of soldiers.

I think a question to the FSA or whatever they call themselves, together with one to that nice Mr Aspden is in order, and quick.
First thing tomorrow.


Yes

  • cold-dose
  • 11/10/08 31/05/09
  • unspecified
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  • Thu, 30/10/2008 - 17:52

Yes