Investors are on their own when things go wrong
VISITING Guernsey I was saddened to read the plight of the Providence investor in the Guernsey Press (5 April). Guernsey investors have been particularly hard hit by this fraud, as indeed were the local depositors in the Landsbanki debacle.
The two events are connected as the Channel Islands Financial Ombudsman was established as a direct consequence of the Landsbanki collapse. Your correspondent is not a sophisticated investor and this may well have been why she was targeted but the CIFO is exactly right in his reply – the remit of this function is clearly defined. However, like a computer he cannot elaborate on his function and put it in the context of the layperson who, being unfamiliar with the world of investing, will have naturally assumed that the people in charge of who can and cannot operate in the islands would have put in place controls to prevent such a fraud and also a system of safeguards and protection in the event that such a fraud should happen. On this basis, a mechanic who fails to reconnect the brake cables of a car is not responsible for the subsequent crash because the driver of the vehicle should have checked them himself before driving off. So with all things in this world we must learn from past experiences and the one all investors and depositors in Guernsey should have learnt is that the Channel Island governments are either unable or unwilling to help local investors when things go wrong. This is not a malign message to those authorities, it is a direct message to anyone who invests or banks in the Channel Islands to obey the fundamental rules of investing.
Do your own research, don’t commit more than you can afford to lose and don’t put all your eggs in one basket.
I personally put the bulk of my savings with the UK government. They had no legal obligation to repay the Icebank savers in 2008 but they repaid 100% within three months. What did Guernsey do?
After the war, the UK government exchanged all of the worthless reichsmarks into sterling when they had no legal obligation to do so. Some people place a moral obligation above the legal requirements and this is to where your Providence correspondent appeals. To the Channel Island authorities, this plea is in vain.
NICK POINGDESTRE
16, West Park Avenue,
St Helier,
Jersey.