Friday, July 10, 2009

"The Isle of Man failed KSFIOM depositors spectacularly"

To give credit where it is due the editor of SHELTER OFFSHORE wrote a well-balanced piece in response to criticisms he received about the way the Isle of Man was being promoted as a good place to put one's money. He said:

Recently we ran several articles on the Isle of Man and its reputation as being one of the safest and best regulated offshore jurisdictions. The storm of emails that came back to me was quite overwhelming - more importantly they weren’t of the nature that I normally receive. These weren’t emails from millionaire expatriate investors who’d fallen a few percent short of the original projections, they were from very real people who had lost their entire life savings, retirement incomes and any chance of ever getting their money back. The victims were investors and depositors at Kaupthing Singer & Friedlander, Isle of Man (KSFIOM.) So why, when over 10,000 investors and depositors have lost so much while depending on the Isle of Man’s regulation and guarantees for security, am I still saying that the Isle of Man is a safe and recommended offshore jurisdiction?

There’s no point in beating about the bush - the Isle of Man failed KSFIOM investors and depositors spectacularly, and their failure to resolve the situation quickly has indeed damaged the Isle of Man’s (IOM) reputation as a safe offshore jurisdiction.

......... There’s actually a whole catalogue of blunders that resulted in KSFIOM investors and depositors losing their savings, the IOM is partly responsible but not entirely, you can find far more information at a site specifically created for the victims of the collapse. I personally am equally disgusted at the way this particular situation has been handled, but I won’t leave the blame totally at the gates of the IOM government when the UK government and the FSA also played an active role.

The Isle of Man government do deserve to be criticised for what happened and should be held fully to account, but the fact is that the IOM is still one of the most responsive offshore jurisdictions.........

In the final analysis because of the significant dependence on its financial services industry the IoM can not afford to dismiss depositors simply by implementing its flawed compensation scheme.

No doubt the government believes KSFIOM was a 'one-off' casualty of the international financial crisis and it is tough luck that the depositors are colateral dammage. But that is not good enough. In response to the financial crisis all European governments acted swiftly to ensure that savings in banks in their jurisdiction were safe. The UK did this where necessary by nationalising failing banks and guaranteeing the savings of UK residents who put money into KSFUK & Icesave. The IoM government has not responded in like fashion. It is a Crown dependency so it should.

Full article : here


  1. Absolutely right! How can the Isle of Man conduct off shore finance without it having the means of dealing justly & responsibly when faced with a crisis? As I see it without the backing of an onshore nationalised parent bank the Isle of Man's ability to take deposits would rapidly collapse

  2. I found this blog through Twitter. I have an account with an IOM bank but after viewing some of the 'dont bank on the isle of man' videos on youtube & from what I have now read about the Kaupthing cockup I will be closing my account this week.

  3. Since John Aspen, CEO of the IoM Financial Supervision Commission(FSC)has been rewarded with a salary increase rather than being sacked and charged with criminal negligence along with the Directors of the Kaufthing Singer & Friedlander (IoM) Bank for their blunder in authorizing the transfer of over half a billion pounds of depositors money to the Kaufthing Bank in London, without any guarantee from the UK Government that these funds would ever be returned, shows the contempt and disregard the IoM Government has for the KSF IoM depositors.

  4. Let's hope that more people find out about the disastrous results of the KSFIOM fiasco, and realize how the IOM regulatory bodies failed drastically in their role of protecting depositors. Don't bank on IOM!

  5. If the Isle of Man wants to continue to be regarded as a global financial center, it needs to get its act together and before any other business, ensure that 100% of KSF depositors received 100% of their money back. The negligence and unethically callous attitude of the IOM government, the UK government and, I'm sure in no small measure, the Icelandic government, towards people who've sunk their life savings into the bank cannot - must not - be allowed to continue with impunity.