I have accepted an anonymous comment to the post 'Depositing in the IoM could seriously damage your wealth'. I respond to it hereunder.
The IoM boasts itself as a world leader in the offshore financial market, having a triple AAA credit rating & a budget surplus that is required by statute. Nevertheless it does not have the financial infrastructure in the form of a bank of last resort or a corporate commitment by its banks to underwrite the liquidity of one of its members in the event of there being a run on it.
The IoM boasts having a strong regulatory framework underpinning the conduct of banking business on the island. The government says that KSFIOM was "a one-off" incident (though there were 2 previous 'one-offs'). That being the case the government & the banks should have great confidence in the stability of the banking sector to withstand the chill of a recession, and had there been a mechanism in place to cope with the sort of crisis that hit KSFIoM - a crisis that the FSC was party to & capable of handling rather than simply resorting to withdrawing the licence - KSFIoM might still be operating today. Certainly 11,000 people would not have lost everything on 9 October 2008.
It is not good enough to simply say that the IoM with a population of 80,000 can not have a bank of last resort. You can not have your cake & eat it. If the IoM is to be a leading trustworthy offshore financial centre then it has got to be able to offer depositors from around the world the assurance that their life savings are safe on the island. This is a Crown dependency & if necessary it should have the backing of the Bank of England, and preferably have its banks regulated by the UK.
Hitherto the IoM had no problem in allowing people with £50k ++ to deposit on the island. Now post KSFIoM there is a problem, & the seriously flawed compensation scheme will only cover deposits up to £20k from October 2009. On present form - unlike the UK FSCS - it will be up to 12 months before compensation is paid.
Depositing in the IoM is no longer the best option for anyone looking to deposit a substantial sum from the sale of a house, an inheritance or a life's accumulated savings designed for one's 'golden years'.
On its own admission from October the IoM can now only operate a 'piggy bank' deposit service up to £20k. That in itself is good enough reason why millions of people around the world would not consider depositing on the Isle of Man. There are at least 15 other reasons that readily come to mind for not doing so.