From Francis Le Gresley,
manager, Citizens’ Advice Bureau.
I REFER to your editorial of 19 September headlined ‘Safeguards come at a cost, too’ and would dispute the view expressed that the consumer could or should in any way be expected to share a proportion of the cost of setting up a depositor compensation scheme in Jersey.

The consultative paper, issued by the Jersey Financial Services Commission in May 2000, ‘A depositor compensation scheme for Jersey’, proposed that any compensation fund which might need to be established, following a bank failure, would be created by a levy on all financial institutions which are licensed under the Banking Business (Jersey) Law 1991 to carry on deposit-taking business.

Furthermore, the consultative paper proffered the view that the cost of the administrative arrangements of a depositor compensation scheme would ‘not be so significant as to make the imposition of an administrative charge on participating banks economically viable’ and therefore proposed that the administrative costs should be met by the States of Jersey.

The UK Financial Services compensation scheme is free to consumers, as is the Isle of Man’s depositor’s compensation scheme, the latter being administered by Isle of Man Financial Services Commission. It is a fact that member states of the European Economic Union are required by law to have a depositor compensation scheme in place (European Directive 94/19/EC) and that the introduction of such a scheme was ‘strongly encouraged’ in the 1998 UK Home Office review of financial regulation in the Crown dependencies, commonly known as the Edwards Review.

Sadly, it seems that the Jersey authorities have chosen to rely on the strict authorisation criteria for banks seeking a licence to trade in Jersey rather than offer small investors the fundamental protection that a statutory depositor compensation scheme would provide.

The recent financial problems of Halifax Bank of Scotland, which caused great concern to local savers with that institution, must now bring into question that decision.
St Paul’s Centre,
New Street,
St Helier.