Email from Mr Cameron

Posted 06/11/2008 - 14:15 by TAZMAN


I am writing on behalf of David Cameron to thank you for your further e-mail, regarding the compensation for British savers with deposits in offshore banks.

We believe that it is time for an inquiry into the Government and the FSA’s handling of the Icelandic banking crisis. Whilst it was right for the Government to protect UK savers with deposits here, there are now questions about whether the authorities could have acted sooner. We need an inquiry to find out what the Government knew and when they knew it. We also need to know whether the UK authorities triggered the problems that British depositors face in the Isle of Man and Guernsey

Questions have arisen about the accuracy of the Chancellor’s claim that that Icelandic Government had ‘no intention of honouring their obligations’ to compensate British depositors. This claim was used by the Government to justify the freezing of the assets of Icelandic banks. A transcript of a conversation between the Chancellor and his Icelandic counterpart is inconsistent with Mr Darling’s claims and makes his justification for freezing assets look increasingly shaky. However, we still believe that it is right to compensate Icesave depositors.

As you will be aware, the UK Government has agreed to act on behalf of the Isle of Man in negotiations with the Icelandic Government. As the Government continues its talks with the Icelandic authorities it will have to examine the knock-on effects of its actions.

The Shadow Financial Secretary to the Treasury, Mark Hoban MP, has written to the Treasury Minister Ian Pearson, calling for an independent inquiry whose remit should be to:

Establish a proper chronology of events from the first time that the Tripartite Authorities became aware of the problems of the Icelandic banks and the threat that this posed to UK depositors;
Explain the discrepancies between the Chancellor’s remarks that “The Icelandic Government...have me told me yesterday they have no intention of honouring their obligations” and the transcript of the conversation with the Icelandic Finance Minister, Mr Mathiesen, when it was apparent that the Icelandic Government intended to meet its commitments;
Explain why the Government was required to use anti-terrorism legislation to freeze Landsbanki’s assets in the UK and what other routes were considered;
Justify why the Freezing Order froze not just Landsbanki’s own assets but also disrupted the business of its wholesale customers;
Set out the discussions that the FSA had with the Icelandic banks operating in the UK prior to 8th October about their solvency and any actions that they could have taken to strengthen their position;
Explain why Kaupthing Singer and Friedlander and Heritable had breached their threshold conditions, thus triggering the transfer of deposit accounts to ING Direct and putting these two businesses into administration;
Set out discussions that the Treasury and the FSA had with the authorities in the Isle of Man and Guernsey about the operations of the Icelandic banks including any advice given to them; and
Establish whether the actions of the UK authorities triggered the administration of Kaupthing, Singer and Friedlander Isle of Man and Landsbanki’s activities in Guernsey.
We are aware of today's Adjournment debate on this matter and Mark Hoban will be present. I must advise you that this type of debate does not permit other Members of the House to participate, but Mr Hoban will be listening to the debate.

Thank you, once again, for writing.

Yours sincerely,

Lara Moreno Perez
Office of the Leader of the Opposition
House of Commons

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