Bond fears over Manx protection
Skandia is warning that the Isle of Man’s strengthened depositor protection scheme may not provide cover to people with investments in insolvent banks through offshore bonds.
Yesterday, the Isle of Man government confirmed it was to bolster its scheme and will present new proposals on Thursday, with Kaupthing Singer & Friedlander IOM set to go into liquidation on Friday.
Several members of the House of Keys, the Isle of Man parliament, have lobbied for the compensation scheme to include offshore bonds but industry experts are concerned that they will not be included.
Skandia has £65m invested in around 600 offshore bond policies through KSF in the Isle of Man.
A spokesman for the company says: “We do not believe this extends to people invested in offshore bonds and does not address the position our clients are in. We will continue to press the authorities and trade bodies for a good resolution for investors in offshore bonds.”
The Isle of Man government says it will restore protection to all the categories of non-individual depositor previously covered under the 1991 scheme, including charities and businesses, with the maximum level increased from £15,000 to £20,000. However, it could not confirm whether these revisions would cover offshore bonds.
Protection for individual depositors will be retained at the recently increased £50,000 maximum level with costs to be shared between the banking sector and the government.
Last week, AJ Bell called on the Isle of Man treasury to provide clarification on whether deposits in Sipps and Ssas are covered.
AJ Bell marketing director Billy MacKay says the firm is now confident that Sipps and Ssas are covered as the strengthened scheme will restore the non-individual protections offered under the IOM’s 1991 scheme.
But Mackay says the firm is still lobbying the Isle of Man treasury for non-individual and individual depositor protection to be levelled.
Norwich Union confirmed that 119 of its Ssas customers have money invested in KSF IOM.
An Isle of Man Financial Supervision Commission spokesman says: “The government has had strong representation from individual depositors and insurance companies so they are aware of the concerns but whether or not they can afford to extend it beyond current parameters is a matter for them to consider.
“They were particularly concerned to provide support to charities and small businesses and children’s trusts but the depositors under wrapper arrangements were further down the line in terms of consideration.”