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On the question whether depositors in the Isle of Man or Guernsey had any choice in the matter of opening offshore accounts, or whether non-UK residents are forced to open accounts offshore, I can confirm that
this is not the case. There is no legal bar under UK financial services regulation that would prevent a non-UK resident from opening a new bank account here. When an account is opened remotely, more onerous anti-money laundering checks are, quite properly, required because of the increased risks involved. This might well be a factor in the willingness of some UK banks to offer new accounts to non-residents. However, this would not be a burden for customers who move offshore but wish to retain existing accounts.
A point was made about Derbyshire Offshore, and I want to make it clear that no member deposits were moved to this subsidiary by the society, other than on the instruction of the member depositor. Depositors in Derbyshire Offshore would not have been covered by the UK FSCS before they were transferred to Kaupthing Singer & Friedlander, and it remains the case that, when they were transferred, they were regulated by the Isle of Man authorities and would have come under the Isle of Man’s compensation scheme.
Corporate bonds and similar debt securities issued by banks are not covered under deposit rules, because they are investments rather than deposits. If a bondholder suffers a loss as a result of the failure of the bank that issued the security, they may, for example, have a claim against an adviser who gave advice in relation to the purchase of the bond. If that adviser were in default and unable to meet that claim, there would be a protected claim under the investment business rules of the FSCS, which would be paid by the FSCS, subject to the relevant limits and the normal eligibility conditions being met.
My hon. Friend also mentioned Guernsey. It is certainly not my understanding that depositors in Guernsey lost everything when Landsbanki went into administration on 7 October. I should say, first off, that that entity is regulated by the Guernsey authorities and is therefore outside the UK FSCS. The administrators have already proposed a part-payment to depositors equivalent to 30p in the pound. They have also said that the prospects for further repayment to depositors are good.
I have tried to address the main points raised by my hon. Friend, and I sympathise with her constituents over the situation in which they find themselves. KSF Isle of Man is a matter for the Isle of Man authorities and, as she will be aware, PricewaterhouseCoopers has been appointed as the provisional liquidator. It is engaging directly with the administrators of KSF in the United Kingdom. Depositors with specific queries should contact the provisional liquidator and the Isle of Man authorities. Given the issues that my hon. Friend has raised, however, I would be prepared to ask officials to meet her to discuss the situation—
The motion having been made at Six o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half- past Six o'clock.
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