LANDSBANKI DEPOSITORS ACTION GROUP WELCOMES FINDINGS OF ‘HOUSE OF COMMONS TREASURY SELECT COMMITTEE’
Committee Calls On UK and Guernsey Governments to Work Together
& Recognises Depositors’ ‘Severe Distress’
The Landsbanki Guernsey Depositors Action Group (LGDAG) today welcomed the findings of the Treasury Committee report which quoted evidence given to the Committee by members of the failed bank’s Action Group.
The Committee felt that the Crown Dependencies should work closely with the UK to resolve the issues surrounding offshore banking practices as well as the losses that savers have experienced due to the bank’s failure. The LGDAG has and continues to pressure the UK and Guernsey government to do this as a matter of urgency. The Committee further stated that there needs to be better regulatory communication between the Crown Dependencies and the FSA. The Committee also felt that the UK had no responsibility to protect savers who deposit money in accounts held in its Crown Dependencies even though saving ‘offshore’ is implicit in FCO (Foreign & Commonwealth Office) advice to expatriates.
Matthew Dorman, spokesperson and Director for the LGDAG, said, “ The report largely stated what we expected: a disappointing lack of presented evidence from the States of Guernsey and GFSC when we have been led to believe that both entities have been very supportive behind the scenes in assisting with the recovery our lost savings. We hope now, however, that the States will show a more realistic face and listen in more detail to the proposals which we expect the Administrator to make in the near future and which would go a long way to resolving this crisis satisfactorily for both savers and the States’ Treasury.” He added. ‘” The report calls for closer co-operation between the Crown Dependencies, UK government and the respective regulators and I hope we see the evidence of this co-operation in the near future, to prevent further bank failures as a result of poor regulatory communication and inaction on the part of the host administration’.
The report shows the considerable lengths and efforts which have been expended by the Isle of Man government and regulator in assisting the savers of KSF who have been affected by that bank’s collapse in comparison to the minimal support which was submitted as evidence by the Chief Minister and Peter Neville of the GFSC.
The Committee’s findings further highlighted the difference in approach by the Isle of Man Government compared to that of the States of Guernsey in confronting the issue from the outset rather than to place full responsibility of recovery on the shoulders of the Administrator. Landsbanki Guernsey’s Administrator has made it clear that 100% recovery of depositors’ monies will not be achieved without 3rd party intervention but the Chief Minister’s evidence merely stated that, ‘no tax payers money will be used’ to bail out the savers of Landsbanki Guernsey. This is despite the Administrator having already submitted a number of alternative mechanisms which would have little impact on general Treasury resources.
The Isle of Man regulator also produced significant evidence with regard to its communication with the FSA. In contrast little or none was submitted by the GFSC.
LGDAG welcomes the Treasury Committee’s recommendations that the State of Guernsey and UK government work together to resolve the LG issue and trust that this will now galvanise the Guernsey government into tangible proactive action which will result in 100% recovery of savers lost deposits.
The Guernsey Government which constitutionally is made up of both the States of Guernsey, and the Crown, does have the responsibility to protect Guernsey depositors. The Treasury Select Committee recommended that the authorities of Guernsey and UK work together towards a resolution which recovers savers’ money and the LGDAG hopes that the Chief Minister and his team will have positive ideas to discuss with the UK authorities in the very near future, with a view to ending the distress depositors continue to experience over the potential loss of 70% of their savings.
Quoting research undertaken by LGDAG member Emma Bergh-Apton, which determined that only two out of fifty-seven UK banks and building societies surveyed would accept Expatriate British citizens as depositors, the Committee recommended that the FSA undertake work to identify why provision is so poor and report back on steps to be taken to ensure better provision.
The Committee further criticised the actions of the FSA noting that both Guernsey and the Isle of Man expressed concern over the level of the FSA’s communications with them during the crisis and stated ‘we note with concern the suggestion that the paucity of information provided by the FSA may have impeded the ability of the regulators in the Crown Dependencies to safeguard their own financial systems.’ They recommend that the FSA ‘review its existing powers and strategy for dealing with other jurisdictions’.
The LGDAG has since raised a number of issues with the FSA, the Treasury and the BBA concerning the actions of authorities and regulator and again calls for an urgent review into the actions of the Treasury and FSA.
For interviews and comment from LGDAG, please contact Nick Carter at Mandate Communications on 020 3128 8109.