Island ‘dragging heels’ on bank deposit scheme
Friday 16th January 2009, 2:59PM GMT.
MINISTERS are dragging their feet on bank deposit protection while Guernsey has already got a scheme up and running, say the Consumer Council.
The consumer protection body, chaired by Senator Alan Breckon, has said that ministers need to pick up the pace so that Islanders’ bank deposits are protected if another bank goes under, like Icelandic bank Landsbanki did last year.
‘We have not got anything,’ said Senator Breckon (pictured). ‘We’ve got nothing that gives money to anybody, and there is nothing in the offing that I know of, beyond the statement in September that a scheme was not necessary because of the top 500 bank rule. It is a question of us picking up the pace.
‘People expect deposits in banks to be safe – if you stick your money on the Grand National and lose it, then c’est la vie. But people are entitled to assume some degree of safety in banks.’ Since November, all Guernsey retail deposits have been protected.
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Alan Brecon is quite right a depositor protection is essential for Jersey, however there is a way to gain full protection for your savings!!!
You can open a savings account with the leading banks in the United Kingdom, fill in the appropriate forms stating for tax purposes you are resident in Jersey and you gain the full protection of the English goverment and you do not pay English tax only your local tax
Problem sovlved, secure banking, the service is as good as that recieved localy and deposits are protected up to 50,000 pounds, I.E gauranteed by the UK FSA and the UK Goverment
happy new year, transfer your money as soon as you can
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Jersey can ill afford NOT to get a DPS in place sooner rather than later. Forget the top 500 banks, nothing is secure in this economic climate. I seem to recall Senator Ozouf at the first meeting of the Landsbanki Depositors Action Group giving assurances that such a scheme would be actioned in the very near future?? What happened there? Keep the pressure on Senator Breckon before there is a backlash like there was in Guernsey over Landsbanki otherwise it will be a case of ‘Placing your money in Jersey could seriously damage your wealth’.
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I have been told that locals bank deposits alone total £10 BILLION, the States do not have the money to guarantee this all they have is some £500 MILLION (?) in the rainy day fund
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I cannot see a scheme being developed in a hurry.
One of the top 500 banks allowed to operate in the island, Anglo Irish Bank, was taken over by its government today.
If a bank went bust in the island, the States would be reduced to their usual behaviour when faced with a problem, running around and woffling!
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good info mike.
but again guernsey had beaten us to the post.
strange how the spice shops closed at the drop of a hat, but anything a bit meaty drags on and takes eons.
what do the people from finance houses think about this?
please post on here as us, non finance people can read your views please.
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Jersey can’t guarantee bank deposits. OK it is a self governing Island however, it is smaller than most councils in the UK can’t bail everyone out. Most people sound like they have live the wrong way ie.
Guarantee bank deposits
Pay reduntancy etc
Where does the islands line of credit stop? Smell the coffee we are an island no bigger than a small village.
OK, if your worried about deposits why not look at the options available including UK banks.
Remeber – the bigger the reward the bigger the risk.
I’d love to know how many Lansbanki customers bragged at dinner parties the rate of interest they were getting…
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First: savings of the actual residents should be 100% protected.
Second: billions of tax dodgers from around the world – protected only if there is anything left after work of our elected representatives…
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My fixed deposit came up in Dec, I asked if Jersy had passed a protection law, when I got the answer I moved the funds to IOM, same bank but there I get protection. Jersey has always sold it’s self as an offshore banking haven, but having lived there for 30yrs I know the wheels turn very slowly and not always in the right direction.
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When will people grow up and live in the real world; every thing we do necessitates a risk assessment. You might walk your dog and kids on a Green Lane but not on the Avenue why? One is more dangerous than the other. Nothing we do is without risk and it is the same with our savings.
When you decide which bank to use for your money you automatically make a risk judgment as to the safety of that bank, don’t say that you don’t. If I offered you 50% per annum in a Bank in Zimbabwe or 1% in Jersey most people would choose the 1% in Jersey. Why? Because it is safer; however it was not, is not and can never be in any sense of the word ‘guaranteed’.
Your money is only as safe as the bank is solvent. In the same vain if you go off chasing higher deposit rates in the IOM from a lightly regulated bank then don’t expect it to be safe. Think of it logically; the bank takes in your money and lends it out again, the riskier the lending the higher the interest rates so the better rates they can give depositors.
Anyone who fell for the lower cost, no front office staff argument for higher rates must be nuts. How much do you think a bank clerk earns? Certainly not enough for the lack thereof to justify an extra 2% on deposit rates.
The safest place to put your funds is within National Savings and this route is open to Jersey residents. Why don’t people do this? They don’t because the rates are lower than banks. Why are the rates lower than banks? Rates are lower because security is greater and need is less. There is no such thing as a free lunch!
On to a depositor protection scheme; I would ask the question to all of those shouting for one. How is it to be paid for? There is too much of a ‘someone must do something’ culture without anyone giving proper thought to the consequences of their bleating.
A protection scheme has to be paid for if a bank goes bust and a claim is made. Therefore someone has to underwrite the maximum potential liability. (if this is too complicated go and read the Beano) this liability can be underwritten in a number of ways.
By the States from their own resources (great; that means you and I pay for it, where will we get the money and why should I pay for your decision as to what you do with your money?).
There could be a commitment from every bank doing business on the island to fork out if one goes bust and cover local depositors funds, are turkeys really going to vote for Christmas? I don’t think so. If this was forced through how many banks would load up their memory sticks and turn the lights out?
Finally we could pay for an insurance policy, pop along to the chap who does your house contents insurance and ask how much that would cost. You would be asking an insurer to cover the possibility of a bank trading in Jersey becoming insolvent; do you want to take that bet? I don’t think so, not with almost every major bank up the creek without a paddle.
If anyone actually follows the news they might just have noticed that the UK Government and the Americans and European are propping up their banking system as they are the only entities with the funds to do so, or more accurately the credit worthiness.
This is what happens when a very small island sucks in a huge finance industry and gets rich off the back not to mention our esteemed 11ks. Our personal wealth (as a whole) is huge, but apart from being solvent the government’s only asset is our tax.
Simply put; we cannot afford to guarantee our own deposits, live with it, go and moan about the new incinerator instead!
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Hi there, regarding comment No 6
I am the chap who back in October had the guts to go public and appear live on BBC Radio Jersey 3 days after Landsbanki Guernsey went down. One week later I was able to call a meeting at the Town Hall which resulted in a turnout of over 60 people.
Yes I have been bragging about the extra 1.15% that I was earning having my money in a Guernsey Bank account, in fact at the various Dinner Parties we would all have a swim in my private pool use my gym, and then all watch a movie in my in house cinema!
Now back to the real world, people will always be tempted by a better deal, this may be the case in buying a new car, household goods etc etc. I am not going to divulge my own circumstances but there are many people lets say, who had £20,000 tied up, this 1.15% would have meant an extra £230 apposed to a local bank, a small amount I know, but to some people this may have paid for their membership to a sports club, once again etc,etc!!
So please, don’t go on about dinner parties I am getting very bored now with so many people hiding behind a computer screen, when once again I have had the guts to come forward.
Regards
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Agree with you Peter. The mistaken idea that it was only ‘the wealthy and privileged’ who deposited money in Landsbanki is insulting and ignorant. My young daughter has worked hard since she could do a paper round, often doing more than one job and working weekends to save enough for a deposit on a house, which she has now lost. Just an ordinary working class person who had aspirations…….no dinner parties or 4 x 4′s…..so until you know the true facts do not ridicule people who make the effort to pay their way in life by sheer hard slog. If other jurisdications can have a DPS in place why not Jersey. Sadly Guernsey’s was a case of shutting the stable door after the horse had bolted.
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The point is that people moved their money from big, safe high street banks to a little Icelandic one because they were offered just over a percent extra interest. Why did the Icelandic bank offer higher interest? Because they were already in difficulty and needed the money.
Listen, investors: The higher the interest offered the higher the risk. If you choose to risk your money in a riskier venture, there is no reason the rest of us should bail you out.
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Norman, hindsight is a wonderful thing, but you are mistaken because these people were not investors but depositors, putting their money in a bank. The word bank used to conjure up a feeling of safety. Sadly these depositors were human beings and looking for a good rate of interest. That is called human nature not greed, and I think you may have felt differently if your savings had been involved.
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JG very unfortunate use of words ‘conjure up a feeling of safety’ conjure is defined as To summon (a devil or spirit) by magical or supernatural power.
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IMHO – Best place to put your money? RBSI. It’s now just about owned by the UK govt, so for the time being it is as good as gilts. Just keep watching it, though. Bank accounts are now like equities (need constant monitoring). Forget about interest rates, you need to protect what you have now, folks!
Oh, and as for the Landsbanki thing? I agree with Norman Norman (12). I’m sympathetic to the depositors who lost money, but still – if you pay no attention to the risk v reward thing, credit ratings etc, then you are asking for trouble.
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Peter – have as many dinner parties as you want – better to spend it than put it in a bank!
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Ireland did their depositor scheme in a bid to save their irish banks from being nationalised…but as we’ve seen in the last week – it didn’t work!
People were onto the con – basically, the Irish government said they would guarantee all deposits but the truth of it is, it’s not possible. Ireland would be bankrupt!
Jersey’s deposits are of such a size now, they too would be bankrupt providing gaurantees for deposits! And i think we can all agree…that’s not a good thing…they waste enough money on for example…a back to front steam clock which faces the tunnel…and doesn’t even work as it is!
It’s all about risk return…
Although please answer me one thing…
Why is Jersey’s rainy day fund of £600 million plus kept in an Irish bank…in Ireland! hmmmm…
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