Economic Development Minister Alan Maclean
ALL Jersey account holders now have £50,000 worth of their savings protected.
Late on Friday the States agreed a depositors’ compensation scheme that will cover accounts in the event of a bank going bust.
Economic Development Minister Alan Maclean has welcomed the decision, saying that although he does not think that it will ever be needed, it will be an important marketing tool.
‘I am delighted that we have got it through; it was vitally important for Jersey that we have a depositor compensation scheme to ensure that we protect consumers and that we remain competitive,’ he said.
Article posted on 9th November, 2009 - 2.58pm
15 Article Comments
I am led to believe that the tax payer is footing some of this bill around one third of it. If this is the case this is appalling. It should be up to the banks to foot any bill 100%. If they aren’t willing, or are unprepared to do so this says a lot about how risky they view their own business, as far as I am concerned.
They have been paying a paltry 0.5-1% on savings and lending back out these poorly paid savings to others at 5-6%. This is too great a leverage it should be a lot less.
It is even worse with credit cards still at 19% or more. However can this be allowed to carry on?
Funnily enough this topic was discussed at the Senatorial elections with certain candidates who didn’t seem to think we needed a depositer protection scheme at the time. Was that just electioning, or were they unaware of the unfolding disaster?
I see Senator MacLean doesn’t think that this safety device will be needed. It is a brave or foolish man that is prepared to make this comment in my opinion.
As per normal Jersey lags behind the times on issues that really count. It finally seems to be coming in line with the UK even if it means the tax payer is going to be roped in to help cover the risk.
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despite Mike Higgins and scrutiny’s best efforts to railroad this ………..
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Adrian
It’s a wonder you bother getting out of bed in the morning with the doom and gloom you portray all the time. This scheme is all but a waste of money. No major retail bank will fold as the UK Government will continue to bail them out, it has no choice but to continue until the UK economy fails. If the UK economy fails it would make a tax payer compensation scheme all but irrelevant anyway. The whole thing is a red herring.
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So is this only bank accounts in the UK and Channel Islands, or any bank we like? If it is any bank I will pick one of them ones that pay out rates of about 12% plus like the Iceland bank did.
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That compensation limit barely covers the deposit on Senator Maclean’s next Porsche 911!
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one would hope, that we will not see banks go to wall again, but sadly can we be 100% sure?
could the uk goverment bail out another row of skeletons in the closet?
fight a war, pay for millions who are unempolyed,or will the pound become like the old italian lire?
and can the jersey tax payer, chip in for this, (may never happen)event.
not beans on toast, again for dinner in the future.
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Sorry but I beg to differ there joker. I don’t believe any UK bank is beholdent to a subsidery over here. Maybe you know of evidence to the contrary?
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A move in the right direction, even if better late than ever, to come into line with Jersey and UK.
At least it offers minimal protection to ordinary depositors.
As with economy, power resources, it pays to diversify, with as many banks as necessary to avoid savings with any one of them exceeding £50000, assuming the compensation rules are the same as UK.
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Apologies for my “typo” in comment 8, has meant to write “Guernsey” instead of “Jersey”.
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The idea is pointless. If UK banks go under the first thing the administrators (most likely be the UK government) will do is pillage the assets of their offshore subsidiaries which have faired better. CI banks rely on their parents reserves in the UK to do business and the UK banks will be 100% nationalised. Both UK and offshore economies will go into total meltdown leaving the £ worth nothing.
Meanwhile after a fair chunk of Jersey’s £500m reserve is paid to depositors, Jersey will have even less to keep the most important public sector services running. We won’t be able to borrow because we’ll have no collateral. Finally the EU will bail us out and we’ll become lost in the EU state and convert to the Euro for a currency. Guess how much each lucky depositor with £50k will get exchanging to the Euro, probably £10k worth? Pointless.
Fortunately chances of this happening are very slim also making the scheme pointless. Pointless no matter the result.
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This is not a ‘proper’ Protection Scheme. Unlike the UK, this one is capped at £100m. If a Bank does go under, this sum will be insufficient to provide full compensation. Do the sums. It will cover 2000 accounts with £50,000; 10,000 accounts with £10,000. This is totally insufficient and just another piece of Government spin.
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Only 50k and at the tax payers expense. The US recently upped protection to $200k per account which is covered by the banks depositors insurance.
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“I am led to believe that the tax payer is footing some of this bill around one third of it. If this is the case this is appalling. It should be up to the banks to foot any bill 100%.”
Adrian,
Builders go bankrupt more often than banks. Would you propose a scheme for protecting people against insolvent builders, funded by the builders themselves?
The good builders who know how much it costs to build a house and who have financial reserves could be required to pay compensation when one of their competitors, who undercuts them and has no financial reserves, goes bust.
What a good idea! Make the prudent pay for the profligate.
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The scheme has merits for the small savers (less than £50k) as the States would pick up the loss for those savers and as far as the cap goes hopefully this would be done in a sensible way, such as refunding older savers first to ensure that these people do not then fall onto the States housing schemes and costing more to ‘the state’ in future.
However the idea that banks would fund the scheme themselves is absurd! All banks costs and lending vs savings levels are very tightly audited and no bank existing in Jersey is reaping huge rewards from simple deposits. Large income banks make those incomes from clever and at times risky investments but only when the customers involved fully understand the risks, our JFSC see to that! If banks were to fund the scheme this would only result in higher costs being justified in the JFSC eyes, I mean you can’t have a bank funding it’s own protection scheme! If they could do that they wouldn’t go under in the first place!
I tell you that there is not enough money or benefits that could convince me to be a States member, you’re damned if you do and damned if you don’t. People wanted protection so here it is, now from the comments above you either want it for ‘free’ or don’t think it is substantial enough. Of course the US has the ability to protect larger amounts of money, how big is their governmental budget!
And the person wondering which banks are covered it is simple, the bank must be registered in Jersey to accept deposits. Therefore NO, Icelandic banks with no representation in the island offering 12% on deposits based on their own local unstable economies are not covered. Another absurd idea! If you want to get silly, well over the odds income from dodgy centres then this is your risk, accept it! Otherwise be safe and invest locally to the banks that contribute hugely to the local economies.
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mad foetus the point is your money should be safe in a bank. To say a bank might not be financially astute enough not to go bust makes a mockery of the whole system. If this is the case then it is pointless using them if they can’t be trusted.
GMR “I mean you can’t have a bank funding it’s own protection scheme! If they could do that they wouldn’t go under in the first place!”
So this means banks are not a safe place for ones money.
As far as I am concerned if the banks have faith in their business they would be prepared to underwrite it. Obviously they don’t have faith in themselves. If this is the case then people shouldn’t be using them.
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