Lord Myners

Hello Everyone

Received this letter via my MP Andrew George and feel it is important to share with you. All feedback would be greatly appreciated.
Not feeling well at the moment therefore can not focus properly on the content.

Dear Andrew

Thank you for your letter of 18 January enclosing correspondence from your constituent, Ms DJO Gutted of X address, X Town about Kaupthing Singer Friedlander Isle of Man (KSF 1oM).

Oversight of KSF loM is the responsibility of the Isle of Man's Financial Supervision Commission (FSC 1oM) and therefore arrangements for depositors in KSF 10M are a matter for the Government of the Isle of Man.

The Treasury Select Committee in its report on the failure of the Icelandic banks recommended that the Government should not provide cover for the deposits held by British citizens in jurisdictions outside the direct control of the United Kingdom. This is consistent with the principled position adopted by the Government. Arrangements for depositors in banks in overseas
territories are a matter for the Governments of those territories. As such, it would not be appropriate to use taxpayers' money to guarantee their deposits. This principle is consistent with that expressed by the Chief Minister of the Isle of Man.

The Government takes seriously its constitutional responsibilities for the Crown Dependencies.
Although the Ministry of Justice is the Government Department with responsibility for managing the UK's relationship with the Crown Dependencies, the Government as a whole shares the constitutional responsibilities which the UK has for them. The Treasury is the UK Department with the necessary expertise and is therefore fulfilling this role.

On 8 October 2008 the Financial Services Authority (FSA) determined that KSF UK no longer met its threshold conditions for the purposes of its authorisation to accept deposits, and was unlikely to be able to continue to meet its obligations to depositors. The FSA, in the exercise of its regulatory
functions, concluded that KSF UK was in default for the purposes of the Financial Services Compensation Scheme CFSCS)

Regarding action taken by the Treasury, your constituent may be interested to read the decision of the Administrative court in the judicial review brought by Kaupthing, the Icelandic parent bank, which is available from:

http://www.bailii.org/ew/cases/EWHC/Adminl2009/2S42.html.
The court considered that the Treasury was fully entitled to act as it did.

The Early Day Motion (EDM 474) refers to advice from an independent financial advisor. The UK FSCS can cover losses arising from bad investment advice, poor investment management or misrepresentation. The FSCS can pay compensation for claims on events that took place on or after 28 August 1988 (and after the firm became authorised). This is the date from which these activities were first protected in the UK. For further information your constituent may wish to refer to the
FSCS website: http://www.fscs.org.ukl.

I would like to make clear that a number of the questions raised are either a matter for the FSA or FSC IoM, and I suggest that your constituent write to the FSA or FSC loM as is appropriate setting her concerns.

Please pass on my thanks to Ms DJO Gutted for taking the trouble to make us aware of these concerns.

Yours Sincerely
Paul Myners