KSFIOM DAG correspondence with Life Companies

KSFIOM DAG correspondence with Life Companies

This is the text of a letter sent to all five life companies involved with the offshore bonds with assets held in KSFIOM on 7 November 2008:

We are writing on behalf of bondholders who are members of the Kaupthing Singer & Freidlander IOM Depositors Action Group to ascertain some answers for your clients who have invested considerable sums of money via your offshore bond wrappers, money that has ended up marooned in the KSFIOM liquidation proceedings.

It is now over 4 weeks since the political events of 8 October left depositors in limbo with no access to their money and no knowledge of what if anything will be returned. During this time your communication to clients can at best be described as lamentable. At worst somewhat negligent. It appears most life offices have found it appropriate to send only one letter to policyholders containing no reference to personal amounts at risk and containing such inspiring phrases as ‘…we have written to the liquidator to request information….and the appropriate forms that would need to be completed.’

There has been an obvious attempt to pass responsibility for the selection of KSFIOM for depositors’ funds onto Independent Financial Advisers. They may well be liable for the original decision to invest via offshore bonds however in choosing your life office, we understand that there is a selected ‘panel’ of investment/deposit opportunities of which KSFIOM was one. We also understand that attaining ‘panel’ status is a process that involves investigation and analysis by your investment officers. It is a status that is sought after and cherished in the market. A number of our members have in their possession information that was given to them assessing the ‘low risk status’ of KSFIOM earlier this year and there are reports that money was being deposited in this bank right up until September 2008.

Contractual obligations
Furthermore, we understand that the contract between KSFIOM and the life offices contained a lock-in clause that a) prevented depositors moving their funds in accordance with the terms of their bond contracts in the weeks before the bank’s demise b) was at no time communicated to clients, their IFAs or even your support staff in the life offices.

Depositors entered into their agreements in good faith, believing the stated low risk assessment of KSFIOM and also the flexibility of a bond structure that offers access to funds at any time. How can these factors be reconciled with the reality of the situation depositors now find themselves in?

Time to act
Bondholders have been waiting to hear more from you, believing that you could not completely ignore your responsibility in this financial crisis and expecting to hear reports of your endeavour to sort out an appropriate solution. The continuing silence leads us now to believe that this is nothing but false hope.

We kindly request an urgent meeting with your representatives to rectify the situation. Our Group has used the last four weeks to generate considerable voice through the press, parliament and gain legal representation. Perhaps you could enlighten us as to how you have been campaigning on our behalf. As you know we are categorised as ‘corporate investors’ which means that KSFIOM does not even know we as individuals exist except as a group investment via you, the life office.

We implore you to review your actions both before and after the 8 October and respond immediately. It is no longer just cash we are talking about. People’s lives are at stake. We have found it necessary to put the phone number of the Samaritans on our website after reports of people taking extreme actions over the financial predicament they find themselves in. We are talking about life changing sums that for many were inherited from loved ones or had been saved for retirement. These sums were entrusted to YOU not KSFIOM and you have not acted responsibly, reasonably or respectfully towards your bondholders.

Time for posturing and passing blame to others is over.

We hope and expect to hear from you at your earliest convenience or we will be forced to continue this correspondence in more public arenas.

Yours sincerely

Kaupthing Singer & Freidlander (Isle of Man) Depositors Action Group
email: ksfiompress(?)googlemail [dot] com


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