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Ernst & Young carry out independent review into the Guernsey Financial Services Commission 30th November 2011 Depositors will disagree with some of the comments made in the extract below   Extract from their report: 2.4 The world is now a more complicated and dangerous place In comparison to other jurisdictions, Guernsey has had a good crisis. The most notable event (at least from a public viewpoint) has been the collapse of Landsbanki. Inevitably this has attracted some criticism. Whilst it is axiomatic that the collapse & a banking institution, with consequent loss to depositors, cannot be helpful from a regulatory perspective, it is important to note that Landsbanki depositors in Guernsey have received a large proportion of their money back. Furthermore the reasons for the bank’s collapse are not attributable to regulatory malfunction in the Island. It is also important to compare the fortunes of Landsbanki Guernsey depositors with those of depositors in other failed Icelandic banks. The Commission must take some credit for its actions both before the collapse of the bank and subsequently. Whilst we would accept that Landsbanki hf's collapse in Iceland cannot be attributed to regulatory failure in Guernsey, that is a broad statement that does not cover the full facts. The Guernsey Financial Services Commission had allowed Landsbanki Guernsey to operate in Guernsey under a worthless 'letter of Comfort' and a Guarantee by the mother Company in iceland that had never been signed and that has also proved to be worthless. Depositors were blissfully unaware of this and advertising using the guarantee was allowed right up to the date the bank went into administration. The Financial Services Commission also failed in their due diligence during 2008 and the proof of this has been well documented, although not accepted, in a comprehensive report, Submission for a public inquiry, on the GFSC's dealings with the FSA and the upstreaming of funds to Heritable (Directly linked to landsbanki Islands hf) whilst knowing there was a crisis. The promontory report was produced on behalf of the GFSC, a shallow report that could easily be pulled to pieces, but one that Government and the GFSC have always used as an excuse and refused to address any of the questions asked relating to it. Ernst & Young rather condescendingly state that landsbanki depositors have received a large proportion of their money back. 85% in fact, and surely after more than three years it is not unreasonable to expect 100% of one's hard earned savings returned from a bank that was regulated by the Guernsey financial services Commission. They say it is important to compare the fortunes of Landsbanki Guernsey depositors with those depositors in other failed Iceland Banks. Ernst & Young do not elaborate on this statement, but if you take one such bank, Icesave in the UK, you will find that all depositos were reimbursed 100% by the UK Government within a very short space of time, as were Dutch savers by their Government. Landsbanki Guernsey received no aid whatsoever from Guernsey, in fact Guernsey's Government have tried to distance themselves from the depositors. They go on to say the Commission must take some credit, both before the collapse and subsequently. Well before, is explained in the ' Submission for public inquiry report above', subsequently, after the Collapse the commission did nothing and have been deafening in their silence ever since, failing to address any pertinent questions asked of them. So you will excuse us if we do not agree with Ernst & Youngs rather GFSC friendly statement they have made above. Guernsey's Chief Minister makes statement welcoming the report

Ernst & Young's get out clauses in their report. 30 Nov 2011   We have relied on information as to systems and controls supplied to us by management including oral and written representations made by management. We have not performed independent verification of the financial and other information provided to us and have used the facts and information as they have been presented to us. During the course of work, employees of the Commission provided us with documents, information, data and explanations to facilitate our work. We did not seek to verify the accuracy of the information provided to us in the course of our work, except the extent that we were able to do so based upon the documentation made available to us.   So nobody really accepts any responsibility for any of the comments they make.         Landsbanki Guernsey Depositors can only expect to recover between 85% and 91% of their deposits over a number of years without Guernsey Government intervention. So far they have ignored the Depositors. Its time for select committee type inquiry into the handling of the whole affair, both before and after, to ascertain the truth

IMF report shows the GFSC of 2008 was inadequate January 2011 Reading between the lines the GFSC was certainly inadequate in the way it operated during 2008, it seems that since the banking crisis and the putting of Landsbanki Guernsey into Administration on the 7th October that year, the GFSC has spent all its time trying to correct the way it regulates the banks. The IMF report  shows how the GFSC has moved forward since that time, but that in itself tends to highlight just how inadequately the GFSC dealt with the whole situation during 2008, especially in its dealings with the UK FSA and its lack of due dilligence in the upstreaming of funds to Heritable, relying totally on exchanges between itself and the FSA. Meanwhile unsophisticated depositors in Landsbanki Guernsey were placing their whole trust in Guernsey's regulatory system, which we had been told was second to none. How wrong we were.  The extract from the report below (which in total is about 600 pages) covers the area spoken of above and you can draw your own conclusions. READ MORE    The area of the report on Guernsey Depositors Compensation Scheme is also of interest and certainly shows that Guernsey does not keep up fully with IMF expectations. One has to point out that the DCS is the responsibility of the Guernsey Commerce and Employment Dept and the DCS Board. READ MORE

Landsbanki Guernsey Depositors can only expect to recover between 87% and 91% of their deposits over a number of years  without Guernsey Government intervention. Its time for a fully independent select committee type inquiry.

An interesting aspect of the GFSC, it used to be mentioned in their annual report in 2001, but no longer. Annual report 2001 under status, functions and structure of the Commission: The status of the Commission is dealt with in sections 1 and 4 of the Commission Law. It is not a committee of the States nor a servant or agent of the States and its staff are not civil servants. Neither is it a company for the purposes of the Companies (Guernsey) Law, 1994. It is a body corporate with perpetual succession and a common seal, capable of suing and being sued in its corporate name.   Section 22 of the Commission Law provides that no member, officer or servant of the Commission is personally liable in any civil proceedings in respect of anything done or omitted to be done in the discharge or purported discharge of any function (statutory or general) of the Commission under the Commission Law unless the thing is done or omitted to be done in bad faith. Similarly:- The Financial Services Commission (Limitation of Liability) Ordinance, 1990,The Protection of Investors (Limitation of Liability) Ordinance, 1990 and,The Insurance Business (Limitation of Liability) Ordinance, 1990, made by the States in exercise of powers under section 23 of the Commission Law, together with section 55 of the Banking Supervision (Bailiwick of Guernsey) Law, 1994 and section 57 of the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 provide variously that no liability shall be incurred by the States, the Committee or the Commission in respect of anything done or omitted to be done in the discharge of the Commission’s various statutory functions unless the thing is done or omitted to be done in bad faith.   You really have to work hard on their new site to find the above facts and they are not confirmed in current annual reports.

Landsbanki Guernsey Depositors Action Group reject aspects of the GFSC 2009 Annual Report 30th August 2010 In a letter to the Director General, Nik Van Leuvan on 19th August 2010.  See article and associated letters and reports by following this link.

Quote The fundamental objective of a deposit protection scheme is to give basic protection to small depositors and savers, including small businessmen, so that, in the event of a collapse of a bank, the depositors will not lose all of their “money in the bank”: they might lose some but not all of their funds. Underlying this conventional wisdom is an essentially political notion, that upstanding citizens of a country should not be allowed to lose their life savings – at least, that portion deposited in the bank – if they themselves have not been reckless.The conventional wisdom also throws up the corollary that large corporations and institutions are big enough to look after themselves and do not need special protection.   Philip Marr - Director of Banking   The newsletter of the Guernsey Financial services Commission.Number 16.Summer 2001

GFSC 2009 Annual Report and Financial Statements July 2010 The report mentions various areas of the 2008 banking crisis and a number of mentions are made of Landsbanki Guernsey and how actions taken by the GFSC were directly benificial to the interests of the landsbanki Guernsey depositors, although I would suggest that the Depositors may disagree with that statement. The report can be read on the GFSC website. READ THE REPORT    READ A LANDSBANKI DEPOSITORS COMMENTS ON ASPECTS OF THE REPORT

Landsbanki Guernsey Depositors can only expect to recover between 85% and 91% of their deposits over a number of years  without Guernsey Government intervention. Its time for select committee type inquiry.

9th July 2010 GUERNSEY FINANCIAL SERVICES COMMISSION LOSES £300,000 IN 2009 If it can't keep it's own house in order, how good is its regulation? THE Guernsey Financial Services Commission recorded an operating loss of more than £300,000 last year. Chairman Peter Harwood said it was hit on a number of levels by the onset of economic recession.

GFSC UNDERSTATEMENT   GFSC sees benefits in UK banking regulation overhaul Guernsey press 24 june 2010 Philip Marr director of banking Extract: ‘The transition of certain powers from the FSA to the Bank of England is to be welcomed if it leads to more effective macro-prudential supervision of the banking system and the finance sector general and also to improved or more effective micro-prudential supervision of financial firms, including day to day oversight of individual bank safety and soundness. ‘Although this was clearly a political decision there is a general consensus that the previous tripartite arrangements between HM Treasury, the Bank of England and the FSA did not work as well in practice as they were meant to in theory, particularly during the lead-up to and at the height of the financial crisis of 2008. ‘It can be argued that ambiguity over what each of the tripartite bodies was responsible for reduced the effectiveness of the authorities in dealing with the crisis- Read full article in the Guernsey press

A COMMENT ON THE LEFT HAND ARTICLE That I would say was a complete understatement, as far as the FSA was concerned, and this has been clearly shown in select committee reports, Guernsey was collateral damage and in fact things between the FSA and the GFSC in the run up to Landsbanki Guernsey being put into administration were not working at all. The only problem was that the GFSC did not appear to realise that they were not working and were placing all their reliance on the FSA and the ambiguous signals coming from them, without carrying out their own due diligence. This is made quite clear by reading the letters that passed between Peter Neville ( The then Director general of the GFSC) and his counterpart at the FSA. Those letters were entered in evidence at the Treasury select Committee hearing on the banking crisis. In the meantime the same was happening to the States of Guernsey, namely its Chief Minister, who was being strung along buy the UK Treasury and Ministry of Justice who instead of representing Guernsey were just leading our politicians along by the nose, whilst pursuing their own interests at our expense. Why is the UK a preferential creditor in Iceland and the landsbanki Guernsey depositors not? Because treasury left us out of the equation, but left the Chief Minister believing that they were acting in our interest. It took him eight months before he realised he’d been had and to try to correct his mistakes he went to Iceland in August 2009, far too little too late and has made no difference whatsoever. Since that trip he's gone to ground on the landsbanki Guernsey Fiasco. What I find amazing is the fact that Guernsey’s Government have not taken the UK Government to task and organised their own select Committee type inquiry to find out exactly who did what, when & why. I suspect its because too many mistakes have been made by both GFSC and Government along the line and the last thing they want coming out is the truth in an open honest inquiry. That's what the Landsbanki Guernsey Depositors demand and should be entitled to.

    

Reasons for not depositing your money in Guernsey A New report lays the blame fair and square at the feet of the Guernsey Financial Services Commision and the Guernsey Government and still they do nothing, most Guernsey Deputies appear to have their heads buried in the sand. A Public independent enquiry is called for. Read the confidential letters that passed between the GFSC and the FSA and were required to be submitted in evidence at the Treasury Select Committee hearing   The report demands a Public enquiry into the actions of the Guernsey Financial Services Commission in the months leading up to Landsbanki Guernsey being placed into administration, many questions are asked as to the lack of due dilligence carried by the GFSC and their communications with the FSA. It also calls into question the actions of the Guernsey Government and does not accept that the report by Promontary, instigated by the GFSC under their terms of reference and paid for by them, shows a true reflection of the situation in the lead up to landsbanki's Administration.     Click here to read the covering Letter and Matthew' Dorman's full report .

  

Banking figures released on 28th August 2009 show a further drop in retail banking deposits in Guernsey for the second quarter of this year by 12.8% this adds to the first quarter drop of 9% making at total drop of 21.8% for the first half of 2009. Read More

  

Guernsey Press, letters from readers 7th September 2009. The Guernsey Financial Services Commission fail to address the proof provided by Landsbank Guernsey Depositors Action Group. Read more      The Evidence of impending failure was there - the GFSC ignored it.       The GFSC declined to make comment   Telegraph.Co.UK Extract from article by Rowena Mason 18th August 2009 So the FSA (staff 2,800) relied on the say-so of the Icelandic FME (staff 50) despite the fact that some analysts, journalists and economists were warning that the country’s financial system was looking precarious? Did they take a look at the banks’ annual reports showing loans to related parties running into hundreds of millions? Was there any concern that the web of cross-holdings and opaque structure of investment vehicles behind the banks could collapse like a house of cards? And lastly, why should we put our complete faith in another regulator to monitor banking services conducted in the UK just because its country is a member of the European Economic Area? 5th August 2009   Mr Van Leuvan received a nine page document laying out the proof regarding a lack of due dilligence as regards the GFSC when it was assessing Heritable for the upstreaming of funds from Landsbanki Guernsey. He still refuses to address the points made in that document