Savers fear lost money

Channel Islands’ savers in a bid to get money back

Tuesday, 21 October 2008

By Becca Talbot becca.talbot@consumerchoices.co.uk

Savers from the Channel Islands, who have collectively lost millions of pounds in the offshore arms of Icelandic banks, have formed action groups in an attempt to get their money back.

Following the collapse of the Icelandic economy, anxious customers worried about their savings in the Channel Islands’ branches of nationalised Icelandic banks Landsbanki and Kaupthing have set up action groups in an effort to claim back their “frozen” finances.

The action groups, which include the Landsbanki Guernsey Depositors Action Group and the Kaupthing Isle of Man Depositors Action Group, are petitioning governments in the UK, Iceland, Guernsey and Isle of Man to step in and guarantee 100% of their savings.

According to the Administrator, 2,033 people had accounts with Landsbanki Guernsey, with more than £121 million in deposits. It is estimated that a further 7,000 have around £860 million in Kaupthing Singer & Friedlander in the Isle of Man, which is in provisional liquidation for Friday (24 October).

So far, people who have lost money with Landsbanki Guernsey have been offered an initial payment of 30p for every £1 they had invested, but as yet there is no guarantee that they will get more than this.

Despite the popular perception that offshore savings accounts are dominated by wealthy individuals who are tax exiles, many of those who have lost money are on modest incomes but live abroad.

One dismayed Landsbanki Guernsey saver, a British citizen now living in France, recently joined the website www.iwantmymoneylandsbanki.com. Not wanting to be named, she said: “We rely on the money we have in Landsbanki Guernsey for our very small income. I have no idea how we will manage without it.”

She continued: “We are not rich; we are working class, ordinary people. At our age, we will never be able to replace that amount of money. We are at our wits end and desperately need help. Fellow depositors are talking of suicide, and the thought has crossed my mind several times.”

Iwantmymoneylandsbanki.com was founded by Daniel Herzberg, a saver with Landsbanki, now living in Spain. Setting up the action group in an attempt to claim back 100% of his savings, Herzberg said he felt deceived by the bank.

“We are in shock at the moment, that the Guernsey and UK Governments are not rushing in to protect their depositors at a time when world leaders are literally pumping in billions of pounds, dollars, and euros into their banks and economy to ensure confidence,” he said.

Herzberg, who opened a joint account with his wife in Landsbanki, has lost thousands of pounds, and is campaigning to get his, and other customers’ money back. “How am I ever to teach my two and a half year old son that it is the right thing to do to work hard, to save your money for a rainy day and to trust experts in their fields that they will do the right thing?” he said.

Because the money deposited with Landsbanki Guernsey has been invested outside of the UK, it is not covered by the Financial Services Compensation Scheme (FSCS). In their summary of conditions the FSCS stipulates clearly that it doesn’t cover banks in the Channel Islands or the Isle of Man, so many British savers with the insolvent banks are worried they will never see their money again.

At present, banks in Guernsey are not covered by a depositor protection scheme, and although the Isle of Man will compensate people up to the first £50,000 they have lost, there are fears the scheme could be swamped by the level of the claims.

Mark Stubbs, a depositor with Kaupthing Singer & Friedlander in the Isle of Man, fears he will those thousands. He said: “I find my self in the position where the money I have managed to save over the past 20 years is going to be taken from me by the government. What did I do wrong? I thought that I was being a prudent investor, putting away money monthly in what was, until government intervention, an A+ banking institution with a very long history.”

“We do not want a bailout from the UK taxpayer,” he concluded.

As it is almost impossible for people to open a British bank account without an address in the UK, and many who live outside of the country have been forced to put their money in savings accounts offshore.

It is thought that many people did not realise they were investing their money with an unprotected Icelandic bank, having opened their account before the institution, originally Cheshire Guernsey, was taken over by Landsbanki.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “Obviously this is a very sad situation; it is not just a story of people getting into problems with mortgages that they cannot pay, it is literally the ‘disappearance’ of depositors’ money, with many fearing they may never get their savings back. I can only reinforce the importance of making sure that before you deposit any money with any institution, you check that they are FSA regulated.”

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