Bad News For Kaupthing’s Isle Of Man Customers

I'm very grateful to you for alerting people to the fact that not all of Kaupthing's customers are safe, it's been getting little media attention.

There are many Kaupthing Isle of Man customers, mostly it seems UK citizens, who are now facing the total loss of their life's savings.
I'd encourage any of these customers to join others to discuss what can be done. You can find them in these places:

KSF IOM Depositors Action Group: http://www.ksfiomdepositors.com/cms/

MSE Web forum:
http://forums.moneysavingexpert.com/showthread.html?t=1203227

MSM Web forum:
http://www.moneysupermarket.com/community/forums/t/kaupthing-singer-amp-friedlander-iom-isle-of-man-25211.aspx

Thank you again.

I have nearly 30k invested in IceSave and Kaupthing Edge so I am anxious to read the latest news on this bad situation, so thank you very much for keeping me and everyone else informed. It means a lot at this difficult time.

No doubt the lawyers who handle the liquidation will get their money before any goes to savers or any other creditors!

Isn't it good to know the poor and needy will get something out of it?

As Mark Twain is reputed to have said "It is not the return on my capital that I worry about, but the return OF my capital." That of course was written in the United States at a time when bank failures were a common occurance.

However one must question why UK savers actually have an account in the Isle of Man, especially with a bank from a country that has had problems well publisised for some time. A UK resident is liable to tax on his/her worldwide income, unless they are non-domiciled. Although the Isle of Man operates a deduction ubder the EU savings directive it is not, at the moment, anywhere near 40%. As it is not available for set-off against the UK liability any higher rate tax payer who declared the income in the UK would be facing an effective rate of 65% on the interest, even a basic rate payer would be paying 45%. If one is not liable to UK tax the higher rate would be an incentive but for others, as I said why would anyone do that?

In reply to controller99, many of us had no choice but to have an offshore bank account, if you do not have a UK address you can not open accounts in UK.
The situation with many people at KE IoM is where they have sold their UK property and were in the process of buying another, properties in UK and abroad. These proceeds of their previous sale were deposited in the IOM in instant access accounts on a short term holding.
Ex pats and UK citizens working abroad are another of the big losers, money laundering regulations have made it impossible to open accounts anywhere in the EU without documentry evidence :- of an certified address / utility bills / proof of identity / proof of fund source, any documentation missing - you can not open an account in the mainland but they will refer to their offshore holdings, where utility bills are not an issue - but everything else is still checked out.

mcgrathr -- no you didn't miss anything. The Tynwald (IoM parliament) have been snoozing over this matter and only woke up on Thursday. Note the date of the Isle of Man Depositors' Compensation Scheme linked in the article - 9th October.

I pointed out on Fool several times last week that IoM's compensation scheme (promulgated in 1991) covered only to a maximum of 15,000 pounds stg, i.e. as you rightly said, 3/4 of 20,000. This applied to all IoM banks - Irish, British, Icelandic and others, whatever arrangements were being put in place for their branches in other countries. It was a point that seemed to be lost in all the general sighing of relief going on through the past couple of weeks.

It is good to know that the IoM government has at last woken up with a new scheme reflecting 21st century realities.

controller 99, and many other people will still be under the popular misconception that offshore bank accounts are only for the wealthy "fat cats" to squirrel their cash away in order to avoid paying taxes or some other deep dark reason.



That now is simply not the case, for UK or other EU bank accounts :



Certified address - this must be a domestic address and habitable ie in UK residence council tax - properties listed as commercial / agricultural or where you have a semi derelict property and in the process of renovation or a plot of land to build a new property - DO NOT QUALIFY



Proof of residence :- utility bill :- gas / water / electricity - if you can not provide one of these in YOUR name DO NOT QUALIFY



Proof of identity :- photographic driving licence / passport only - UK paper driving licence / A.N. Other photographic ID DO NOT QUALIFY



Proof of fund source :- as it states - solicitors letter from property sale etc,. saved it under the bed for 20 years DO NOT QUALIFY



You must provide the above documentation then wait days / weeks before all is checked out - they also do credit reference checks and lord knows what else - if anything flags up - REFUSED mainland account.



Offshore still go through and require all of the above but they will forego on the proof of residence and utility bills and will accept other forms of proof in their place.



This is why many UK citizens have been forced down the offshore route and we talking about the FULL EQUITY of a property gone in a stroke of Gordon Browns pen - this is an absolute disaster for hundreds if not thousands of ordinary "working" UK citizens who have saved all their lives and are / were now relocating to other parts of the world - EU - US - Australia - New Zealand and others.

morrellp - and where do you think some of those "tried and tested" institutions have your money ?????

this is a global banking problem where smaller "normal" savings avenues may have large sums of their investors money placed in a single account anywhere in the world that gives a better return...

BEWARE - you could be next

BTW your attitude is offensive - be hoped your savings are safe

One poster has questioned "Why would anyone want to have savings in IOM".

The answer is quite obvious; in our highly taxed countries there is reduced incentive to save, at least on-shore and in fact to even work when in receipt of a pension income in later years!

I live in Canada, another highly taxed country with a complex tax system. I am retired (75).

It is 'Not worth my while' to work further; even though I am capable of doing so. Not only would I pay 40+ income tax on anything earned, it could/would most likely affect any government pension received.It also might place me in an even higher tax bracket; thus reducing the chances of receiving other benefits!

Overall ending up with no net gain except (perhaps) a feeling of doing something worth while in my declining years.

Skintagin - it's so terrible - the deeds of the house must have been in your name/a relative. That would prove source. Did you rent it out? If HMRC can go back 6 years on tax matters there must be a record of your paying the utility bills at some point. Just trying to think of a way to help. Shall we lobby some MP? Why don't you set up a helpline for people in the same situation?

Britain NEEDS its expats. All are specialists, qualified and up-to-date in their fields. The British government should be made aware of that. Come five years, actually now really, the economy could do with your global experience and expertise.
Travel broadens the mind - simplistic but that's what business needs. Some sections are currently in serious tunnel-vision territory.

optimist11 - in your situation I would open a bank account in the country in which you live, preferably online where you can keep an eye on it.

Beagle2Mars, unfortunatly it doesn't work that way, if you have UK accounts and move abroad - then as required inform your bankers of the new non UK address, they close the account.

Utility bills must be current.

To do it legally it's simply not possible, yes there are ways around the system as in anything but you acting illegally.
I took the full legal route and we had 30 years of property equity in the IoM waiting to be transferred to mainland Europe when the new account there was approved - the money was placed in the IoM on 26th September 2008, at the time of writing we have a few hundred €'s in cash in our pockets enough for a couple of weeks - after that who knows.
My situation is bad but not as bad as some others one family is in Austrilia arrived 3 days with his family and they have nothing but what they carried out - their transfer of funds again full equity was seized by Gordon Brown.
Their is a dedicated web site for the IoM depositors caught up in this mess and some of the stories wow - just got be read - ordinary folks caught in the middle - through no fault of their own except they did things legally.

Hi NorthSeaRider

thanks for your advice - I will take a look.

can someone answer this please?
does the depositor protection scheme in the isle of man cover non-uk residents who have put their savings in an Irish bank there?

In an earlier comment, someone asked why anyone would even have their savings in the Isle of Man instead of the UK.

This one is really easy to answer. At the moment I am working abroad, although I am a British citizen, own a house in the UK and pay tax on all UK income in the usual manner.

But, as a UK non-resident, I am legally BARRED from opening an account in the UK (existing accounts that you had before you moved don't count, you are allowed to keep them). So I had no choice but to put my savings offshore. Does that help to you understand why anyone would want to save offshore in the first place?

As I understand it, until this week there was no compensation in place other than the minimum EU amount of €20,000. The 75% was the exchange rate, which is, of course, variable. Some other parts of Europe are still on that minimum level.

KE(IOM) did have a guarantee from the Iclandic parent Co which is now the responsibility of the Islandic Government if they aren't bankrupt yet.

So far as Icesave (UK) is concerned, I thought that ING only took over those accounts operated online and not those operated by any other means.

Optimist11 - You may find that offshore accounts with Building Societies (and it is not just Nationwide, by the way) do not confer membership from the point of view of Conversion Benefits. If you wait until you are posted back to UK, open a BS account then and you should be able to keep it whenever you go abroad again.

Many of us know a lot more about the Icelandic Banks than we did a week ago. The main problem as I see it is that many did not realise until too late that we were effectively banking with an offshore bank of an offshore bank. Would that have bothered me? - Yes.

Once money is deposited in bank accounts it tends to stay there, regardless of changes in ownership -Derbyshire or Singer and Friedlander were safe conservative places to put money in until some bright spark thought that a Kaupthing takeover would benefit its customers.

By the way, even £1million is not a lot of money if you have reached retirement age of 60 or 65 after expat employment with perhaps 25 years of retirement to finance and a home to buy back in UK.

For those who claim UK non-residents cannot open an account in the UK I have to tell you that at least HSBC will open an account for anyone living anywhere in the world. Some banks will not open internet based savings for those living overseas but most will welcome you at any branch in the UK, wherever you live.

As for the person living in Canada he has actually admitted to tax evasion, or at least considering it because of the "High rates of tax," virtually every country in the world that has income tax, taxes the worldwide income of its residents, or in the case of the USA its citizens whether they live there or not.

For the 20 or so "offshore" jurisdictions that signed up to the EU savings directive one can elect to have witholding tax deducted or the interest declared to their country of residence. Very few choose the latter!

comptroller99 - current accounts - yes you can hold with a non UK address - would you like put the entire equity of your property in a current account. Non interest bearing and available to scammers everywhere.

As for tax - the choices are

Tax deducted at source and paid to Tax authourities in the country of account holders registered address, indiviuals details will not be disclosed.

Or

interest declared - this is where the bank informs the tax authourity of any interest earned / the account holders name / address and social security number

Please get your facts right --

offshore accounts are not tax evasion measures

Skintagainnow

If one opens a branch based account any UK bank will offer the full range of products, except ISAs, irrespective of where you live.

If you read the final paragraph of my previous post you have just reapeatd what I said about witholding tax.

Comptroller99 this is my experience, all happened within the last 6 months, hence is current.
You can not open UK or any EU accounts without the documentation stated - under the money laundering regs they simply will not do it.

For UK savings accounts when I declared a change of address to a new non UK address I received a polite letter from my bankers informing that I had 30 days to change the accounts before they would be closed, monies held but not receiving interest.

Also you will find (or perhaps I'm one of the few) with an offshore account that elected for interest declared. However reading through most peoples post on the dedicated site I'm in the majority.

I'm not alone many have gone through exactly the same problems of UK savings accounts and have had to go down the off-shore route.

Hi sounds like you have current accounts (credit cards & overdraft) current accounts are not a problem I still have have my old faithfull nat west current account no problems there at all, wherever you live.
The problem lies with savings accounts & opening new accounts - the property I bought is classed as commercial (former watermill). It has no utilities as generated it's own electricity, water on site no sanitation, no telephone yet. Back to no proof of residence - not classed as residential = no personal bank accounts.
I'm not sure what the stat's are for IoM and Ok some people could be telling a few porkies.
All I can say is from my own experience - 2 weeks ago an eyewatering lump of cash in a current account, enough for the refurb of the property and now - it looks like back to the UK and another drain on the state.

Is anyone else having problems logging in to the KSF IOM DIscussion Board? I have "lost" over GBP315,000 of borrowd funds on which interest will continue to be due and which was intended for investment. Despite trying to open a new account the e-mail supposedly sent to me with further details has not been received-I have retried several times since last Thursday without success hence this avenue. Also I haven't been able to even open the website to view it. Any comments?

At least three people in this thread mention the Derbyshire being bought by Kaupthing. One even moved their money when it happened. To the best of my knowledge and belief it never did happen- I have a newsletter from the Derbyshire saying they are merging with the Nationwide, and there is lots of media comment on this.
Either I'm wrong or the three are and I should be panicking now. I am confident but three people- that's a lot!

Just to add to many of the comments here, including occamsrazors, some of us were using Kaupthing Isle of Man to move money out of, or in my case into, the UK. This is a normal thing if you go overseas for part of your working life, it is not about the super-rich or tax-dodging.

There is another site too for people who have their money in Kaupthing Isle of Man: www.lostyoursavings.co.uk. It urges those affected to go and talk to their MP - if we all get our stories out there we may just get heard.

Comptcontroller: having watched the "debate" between you and Skintagain, I believe you're just a rather unpleasant person, determined to win the arguement even if it means banging on with assertions that just aren't true. I tried to open a UK account with Hsbc just before my job took me away from the UK, and I was turned down. I was able to keep a no-interest current account held in First Direct which had been open for some years, but there was no way I could open a UK account ANYWHERE. I tried Lloyds, Barclays, Standard, the Coventry Building Society and even Tesco Finance. No dice. You're speaking from a position of ignorance.

Comptroller99: my parents retired 16 yrs ago; advised to put savings and house equity into Derbyshire by FSA regulated advisor. Pension paid in there too. Moved to Cyprus as my mum has a ciculation disease helped by warm weather, worsened by cold. KSF buy Derbyshire. Account stays the same.

FSA and Treasury advise KSF to move its money to London to be safe. Gordon Brown immediately freezes KSF assets. My parents have no money and cannot use internet as 'terrorist legislation' used to shut it down.

So, are they 'tax evaders' or simply hard-working ex British Gas employees who have been shafted by our elected representatives'? They have potentially lost ALL their savings and have no access to their pension.