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Offshore protection probe

Chancellor Alistair Darling has blasted overseas territories for “attracting banking customers with lower tax rates without contributing to the UK Exchequer” and has called for a review of their regulatory arrangements.

Darling said an official review of regulatory and depositor protection arrangements in centres including the Isle of Man and the Channel Islands will be published next spring.

He said: “At times of stress, depositors need to know who is going to compensate them. The British taxpayer cannot be expected to be the guarantor of the last resort.”

Darling also pledged to resolve problems relating to the Icelandic bank Landsbanki and called on the European Commission to investigate compensation arrangements between European countries, with recommendations by spring 2009.

The Government’s review will focus on financial supervision and transparency, fiscal arrangements, financial crisis management and resolution arrangements and international cooperation.

The Isle of Man government and Jersey Finance both say they welcome the opportunity to demonstrate they are well regulated, financially stable and internationally responsible.

Isle of Man Finance director John Spellman says: “We would have liked the issue of Kaupthing to have been touched upon but have heard nothing since our discussions with the Lord Chancellor.”

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