Warning about UK banks offering IOM products

Be wary of bankers back to their old tricks

Includes the following paragraphs:

If the products coming across my desk are anything to go by, it’s no wonder Barclays wants to remain out of the limelight. Barclays Wealth, its private-banking arm, seems to be launching one structured product a week at the moment — you know, the kind of product that offers great returns from the stock market plus your capital back in full. They seem too good to be true, and they usually are.

It was only on reading the small print, that you would have realised your deposit would be held by Barclays Bank plc on the Isle of Man — one of the offshore havens that attracted the ire of the chancellor recently.

When Icelandic banks Landsbanki, owner of Icesave, and Kaupthing collapsed last year, the British government stepped in to guarantee deposits — but not for those who had invested via the offshore arms.

Depositors with Landsbanki Guernsey have recovered only 30% of their money, while customers of Kaupthing Singer & Friedlander Isle of Man have protection of up to £50,000 — but the scheme may not have enough cash to cover their claims.

Thousands more who invested in KSFIoM through offshore bonds feared getting nothing at all because the £50,000 limit applied to the bond wrapper, not the individual.