FSCS compensation christmas joy!

Icesave customers’ savings back in time for Christmas

Wednesday 24 December 2008

By Becca Talbot becca.talbot@consumerchoices.co.uk

The majority of savers with failed Icelandic internet bank Icesave have been paid back in time for Christmas, the UK’s depositor protection scheme said earlier this week.

More than 200,000 British savers had money deposited in Icesave when it collapsed in October after its parent company Landsbanki was nationalised by the Icelandic government. Many feared they would lose their life savings.

But the UK government stepped in to pledge that the group’s 214,713 savers would get all of their money back, despite the depositor protection scheme covering only the first £35,000 of savings at the time.

Loretta Minghella, chief executive of the FSCS, said: “The good news is that we have already helped close to 190,000 people through the electronic process. More than 90% of people were able to use the electronic process and other Icesave customers have been sent application forms.”

On Monday the Financial Services Compensation Scheme (FSCS) said it had paid out £3.52 billion to over 199,000 British Icesave savers since the compensation process began in November. Of the 198,219 people who were eligible to use its online claims system, it said 188,738 had already done so.

It urged the remaining 9,481 customers to use the electronic repayment system before the deadline of 30 December.

A further 16,846 people were sent application forms because they were unable to obtain their money electronically, and the FSCS has sent out 10,392 cheques.

Minghella continued: “By Christmas we will have sent over 10,000 people who were not able to use the electronic process their cheques, and we are working hard on delivering the remainder as soon as possible.”

Savers with investments worth £698.7 million in fixed-rate accounts have opted to wait until the maturity date to receive their compensation, according to the FSCS.

CreditChoices.co.uk user Michael Marshall has chosen to keep his fixed-rate account of 7% until maturity, after reading our Icesave Q&A article. He said: “I have now completed arrangements with the FSA to forgo immediate compensation. They will keep my bonds until redemption – 22 months - and pay me interest for the full period. With the bank rate at 2% this is excellent return.”

Among the savers who have already claimed their compensation is Charlie Allen, 24, from Brixton, South London, who had deposited around £2,000 to fund a trip to South America.

When he heard about the bank’s collapse he said he felt “powerless.” But he successfully claimed back his savings through the FSCS and has booked flights for the trip in Febuary.

He said: “Initially I could not be 100% sure whether the UK Government was going to guarantee it. In all fairness, they came out pretty quickly and confirmed that they were going to guarantee it, which was reassuring.”

Mr Allen, who works as a researcher for Which?, said the process for claiming the money back worked well in his case. But for those still waiting, Christmas will be looking rather bleak, and the Channel Islands’ savers deposited with Landsbanki Guernsey have still not heard when they will be able to get back their savings.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “The compensation will come as a welcome relief to many savers who have been struggling over the last few months, however for those still waiting, especially the Landsbanki Guernsey customers, our thoughts are with you.”

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