Consumer's savings accounts are treading on thin ice
07/10/2008
Consumers faced yet another dramatic blow to their finances as the Icelandic internet bank Icesave stopped UK customers withdrawing their money. Over 150,000 UK customers are thought to have savings accounts with Icelandic banks.
The authorities in the UK are preparing for the bank's parent in Iceland, Landsbanki, to be declared insolvent. Many UK customers have been left in fear of losing their money held in Icelandic savings accounts. The bank has not been put into liquidation but into receivership, which allows it temporary protection from payment of debts and obligations when they are due.
Consumers who hold savings accounts with Icesave will be protected for the first £16,300 of compensation under protection arrangements between Iceland and the UK.
Under the newly introduced compensation scheme, the UK's FCSC will pay out the rest of the claims, of up to £50,000 per person.
Commenting on the latest consumer catastrophe, The Financial Services Authority said: "If, as expected, the Icelandic authorities put the firm into insolvency proceedings this would trigger a default under the FSCS. In this case, savers with Icesave could make a claim to get their money back."
The biggest Icelandic bank, Kaupthing, was at pains to reassure UK consumers that it remained financially sound.
The authorities in the UK are preparing for the bank's parent in Iceland, Landsbanki, to be declared insolvent. Many UK customers have been left in fear of losing their money held in Icelandic savings accounts. The bank has not been put into liquidation but into receivership, which allows it temporary protection from payment of debts and obligations when they are due.
Consumers who hold savings accounts with Icesave will be protected for the first £16,300 of compensation under protection arrangements between Iceland and the UK.
Under the newly introduced compensation scheme, the UK's FCSC will pay out the rest of the claims, of up to £50,000 per person.
Commenting on the latest consumer catastrophe, The Financial Services Authority said: "If, as expected, the Icelandic authorities put the firm into insolvency proceedings this would trigger a default under the FSCS. In this case, savers with Icesave could make a claim to get their money back."
The biggest Icelandic bank, Kaupthing, was at pains to reassure UK consumers that it remained financially sound.
