Last October, Axa IoM revealed that 330 of its offshore bond policyholders had a total of around £56m invested in KSF IoM. It says it is still including KSF deposits when calculating the percentage of the value of the fund for quarterly bond charges.
Axa IoM managing director Mike Foy says: “The deposits are not worthless, they are inaccessible. Product charges are typ- ically applied to the higher of the original premium or the current value.”
Skandia immediately excluded KSF assets in calculating any charges due on bond fund values when the bank was placed into administration on October 8 last year. A Skandia spokesman says: “The waiver on charges will continue until we have confirmation on the value of these deposits with the bank. When this clarification is received, we will review the position.”
Norwich Union, Aegon Scottish Equitable and Clerical Medical have also excluded KSF assets in calculating any charges due on bond fund values.
Prudential made a charge in arrears for the last quarter of 2008 but no charges apply after December 31, 2008.
Axa IoM says charges are generally taken in advance in line with the product literature, client illustrations and policy conditions. It is also continuing to levy establishment charges on the bonds.
Foy says: “The establishment charge is the agreed charge for the product, which is independent of the assets within it.”
Worldwide Financial Planning IFA Nick McBreen says: “Providers waiving bond charges is pretty cold comfort while the wrangling goes on between regulators, government and life offices. This could run and run and run and there might not be anything left in the pot at the end of the day.”
On January 29, the Manx government adjourned the winding-up petition of KSF IoM for a further 21 days until February 19, a third of the time requested by the IoM Treasury, in an attempt to formulate an alternative to the depositor compensation scheme.
An early payment scheme of up to £10,000 per accounthol- der with KSF IoM is to be pro- posed at this month’s sitting of Tynwald to provide relief for depositors. But it is still unclear how the scheme would apply to collective investors who dep- osited cash via offshore bonds and in any case many bondholders had hundreds of thousands of pounds invested each.