Saturday, June 27, 2009

Wealth warning - don't deposit in the Isle of Man

The Isle of Man is living in a little world of its own. Its government & Treasury behave as though there were no global financial crisis and that the conclusions & recommendations of the g20 do not apply to them. When it comes to knowing whether your money is safe, the best it can do if your bank can't pay you is offer compensation up to £50,000. Even then it is conditional and does not pay out on demand because it is not funded.

In doing so the IoM is totally out of step with other governments who if necessary have been prepared to nationalise a bank in order to protect savers if it is unable to meet its liabilities to depositors. But in the Isle of Man the chief of the FSC has said that a bank should be allowed to fail, & that savers should understand that there are 'risks' to depositing as there are with investing.

Though the IoM does not have a bank of last resort it does have over 30 banks with something in the order of £60billion in deposits between them. What is it that stops the Treasury negotiating a loan from the banks to repay KSFIOM depositors the money they have lost because of the serious regulatory failure of the Island's FSC? The figures show that the loan could be repaid in 6 years from the recovered assets of the bank.

Instead of being imaginative the Treasury choses to stick to the easy way out, namely allowing the DCS to take care of the first £50,000, leaving depositors who have lost more than this having to take pot luck in what is left in liquidation of the bank.

Does the IoM government believe that ignoring the special & specific circumstances that led to the crash of a solvent bank will not have an impact on the future of deposit taking? Does it seriously think the Depositors' Action Group will give up & go away? Does it believe that by its banks offering higher rates of interest than elsewhere people will feel secure in trusting the Isle of Man with their hard earned savings when they find out the great risk they are taking in doing so?


  1. Top Work, Jim.
    I hope the UK financial and general press receive copies. I'll be impressed if the IOM printed media carry a copy of it!

    Captain Mangoes
    (As sometimes spotted on Tax Research Blog.

  2. You can see the results of this on the
    The manx people have a rabid hatred of Dag.