TREASURY Minister Eddie Teare MHK has denied an allegation in the House of Keys that the Financial Services Commission was ‘asleep on its watch’ following the winding-up of six Louis Group companies.
Last month, Deemster David Doyle ordered the winding-up of Louis Group Structured Fund PLC and five related companies – Louis Group (IOM) Limited, Louis Group Structured Capital Limited, Louis Group International (Europe) Limited, LG SP Investments Ltd and Louis Group SLN Limited.
Joint liquidators Mike Simpson and Gordon Wilson of PricewaterhouseCoopers have called the creditors’ meeting. It takes place at Broadway Cinema, in Douglas, at midday on Monday (February 18).
On Tuesday, Douglas North MHK John Houghton asked: ‘Can the minister agree with me that the members of the public find it very hard to believe that depositors who take money into high street banks are almost interrogated by the militia and his Financial Supervision Commission have not properly regulated an arm of investment in the Isle of Man that is taking deposits? How can that be so?’
Mr Teare said: ‘There are two items here. The first is the allegation that the Financial Supervision Commission was asleep on the watch. I can say that is definitely not correct. The FSC acted in a timely and professional manner.
‘Also, we feel that there are various issues which are surrounding this. I do not want to go into it, because this could well finish up before the courts. It is a court-ordered liquidation, as we said, now and the liquidators will be asked to make a full report to the courts. This will draw out any evidence that there might be of any wrongdoing.’
Mr Teare explained that none of the investment products into which investors placed their money was licensed by the FSC as they were an ‘experienced investor fund’, approval for which was granted by Tynwald in 1999.
‘I am aware that a number of complaints have been made by investors, both to the FSC and through the Office of Fair Trading to the Financial Services Ombudsman scheme,’ he said.
‘The funds in question were unregulated and as such should only have been made available to investors who are regarded as more sophisticated or experienced and therefore able to understand the risks attached. It is therefore vital that such investments are promoted correctly by the issuer or independent financial advisers.
‘While the FSC has no powers to investigate complaints of mis-selling directly or make awards, it will be investigating any complaints made against licensed independent financial advisers who have been licensed in the Isle of Man, and acting on the finding as appropriate.’
Outlining the actions the FSC took, Mr Teare said that in July 2009 the FSC acted to prevent further investment notes being issued by one of the funds – the structured loan notes – and maturing notes from being renewed.
He said: ‘From then on, the commission acted to ensure that more information on the state of the investments was made available to investors by the companies concerned, so that investors could make more informed decisions and also insisted that the accounts of many of the syndicate property companies were brought up to date. Following the issue of one of the fund’s accounts in February 2011, the commission made further inquiries, after reading the content of the auditors’ report that accompanied them. It was arising from those inquiries that the commission petitioned the court for the appointment of inspectors, which took place in May 2012.’
He said the FSC petitioned the court for the winding-up of certain Louis Group companies.