CAF chief tells Treasury to treat charities differently

Finance | Vibeka Mair | 4 Feb 2009

John Low, chief executive of the Charities Aid Foundation, has called for charities to be classed separately from other businesses by the Treasury and Financial Services Authority in the wake of the Iceland banking collapse.

Low, who represented the charity sector at a Treasury select committee enquiry into the Icelandic crisis yesterday, said charities needed their own depositor class, separate from individual, private sector and government depositors.

“It’s grossly unfair that money held in trust for public benefit has been pumped into a pool with wholesale investors, while the government has chosen to bail out high net worth individuals to the full amount and given the charity sector very little support,” Low told the committee.

Through its Financial Services Compensation Scheme, the government agreed to guarantee the return of up to £50,000 to individual savers that lost money in Iceland, but offered no such provision to charities, businesses or local authorities.

Trustees ‘should not be penalised’

The committee, however, questioned why many charities had risked investing offshore in Iceland. Low insisted it was the statutory duty of trustees to get the best return available.

“The credit agencies had incorrectly rated these failing banks, and the government had allowed them to fail,” said Low. “Why should a trustee be penalised for their mistakes? There is a moral obligation to give back money for public benefit.”

Tony Shearer, former head of investment bank Singer & Friedlander (S&F), told the committee that he warned UK regulators that the management of the Icelandic Kaupthing Bank was not “fit and proper” to control a UK bank when it purchased S&F in 2005.

The Financial Service Authority have said his accounts of events is inaccurate.

CAF has opened a confidential financial crisis helpline for charity leaders worried about their organisations’ financial viability.

Directory: Charities Aid Foundation
Who's Who: Vibeka Mair | John Low

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Mark Stubbs
Principal consultant
4 Feb 2009

This article is a disgrace, why on earth do charities feel that they should have precedence over individuals such as myself?

Because I am a British Citizen / Non-UK Resident I was not allowed to bank in the UK and was forced to bank offshore due to changes in UK banking laws.

So my life savings that I have earned over the past 25 years working in some of the worlds most desolate places in order to secure my financial future mean less than donations?

I have made lifestyle sacrifices to have earned my deposits and I find it rather insulting that charities that rely on handouts without making any sacrifices feel that they take precedence over me and are a special case.

Charities had the choice to bank in the UK - I and many other expats dd not!

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