Letter to DCS voicing concerns about Compensation Claim Process and Security

I am very concerned and anxious (and confused...) about all aspects of this latest stage of this awful process. In particular I want to know what the situation will be if we don't claim from the DCS now, or at all. Will we be later (soon?) given the opportunity by the bank to claim through the liquidation process instead?

So, I have just e-mailed the following to info(?)dcs [dot] im - I hope for a clear, helpful and reassuring reply.

Dear Sir or Madam,

Ref: Isle of Man Depositors’ Compensation Scheme (KSFIOM)

We have received your letter of June 5th: Kaupthing Singer & Friedlander (Isle of Man) Limited – In Liquidation (“KSFIOM”). One paragraph, on page 2, reads as follows:

Before making any decision to claim in the DCS you should read the full details of the DCS, the Claim Form and the Guidance Notes, and consider taking professional advice on whether to claim in the DCS or stay outside and receive all payments directly from the liquidation of KSFIOM.

I am sure that you will appreciate that, as creditors of this bank, we have spent the last eight months trying to follow and understand the intricacies of the Scheme of Arrangement put forward by the Isle of Man Government. We now find that we need to make a major decision about an alternative arrangement, without, we feel, any real information or guidance at all. I have read the full details of the DCS (Compensation of Depositors Regulations 2008), as well as all other information provided on the www.dcs.com website, including the Frequently Asked Questions, but nowhere can I find “Guidance Notes”, or the answers to our questions, which are as follows:

What is the relationship between the DCS and Liquidation?

I understand that if we claim compensation from the DCS we will, as (two) Joint Account Holders, be paid £50,000 each from the DCS, hopefully within three months. We will then receive, once the Scheme Manager has recovered this sum of £100,000, the remainder of our funds, depending on the assets available and realised, from the liquidation of the bank. Thus if our total deposit was £x, and the value of the recovery was 80%, we would receive a total of £80x/100.

I would be grateful if you would confirm that my understanding of this is correct.

I do not understand, however, what our position will be if we do not claim compensation from the DCS, and “stay outside and receive all payments directly from the liquidation of KSFIOM”. Will what we receive be equal in total to what we would receive if we claimed compensation – ie. a total of £80x/100 – the only difference being that this sum would come completely from the liquidation of the bank’s assets?

Furthermore, I would like to have clarification of what it will mean for us if we “assign [our] existing full rights in the liquidation to the Scheme Manager”.

It would also be helpful to be given an indication of the difference in timings of payments, according to whether we claim from the DCS or not.

It would also be helpful to have the benefits (and drawbacks) of each choice clearly stated.

I believe that it would help all depositors if these matters could be made clear.

I am also extremely disturbed by the lack of time that we have to make this decision, and by the requirement that it be done (and extremely vital information given) electronically – on a non-secure site.

It also does not appear to be possible to see the Claim Form until one has initiated the claim (registration) process, which requires that one provides the account number and part of the account name – so one does not know what to expect, or whether one wants to proceed, without providing this, very sensitive, information.

We currently live in Asia, and although this letter has reached us rapidly, there will not be time to write to the Scheme Manager requesting that forms be sent to us by mail, to receive these forms, and manage to return them by June 30th. We are not averse to submitting our claim electronically, but would expect to be able to do this via a fully secure site. I am sure that you will understand that, apart from the obvious and usual security concerns, we are very anxious indeed about the security of our funds.

The letter of the 5th also suggests that we take professional advice before making a decision. Please be aware that many of us placed our funds in this bank on the basis of professional advice. Please also be aware that many, if not most, of us do not have the funds to pay for professional advice. In our own case, we are about to retire, we have no funds apart from our savings, which were all in this bank, and no home, and we are about to leave this country to return to the UK. I am sure you will understand that we remain distressed and anxious, and desperately need guidance and a sense of security to be provided in this matter.

Yours faithfully,