Icesave ISA

Degeneratemoo

I received an e-mail from fool.co.uk this morning about ISA's so I thought I'd check my current rate (Natwest) and found it to be a rather poor 4.60%, having checked Martin's ISA guide I've signed up for the Icesave ISA but I wonder if I should have gone for something else...

I've not transferred any funds yet and haven't filled and sent off the form.

I see that A&L are doing a 6.00% rate at the moment and I already have a current account with them, I am thinking it might be easier (and safer given that icesave don't have the full UK savings protection) to have the ISA with A&L.

The icesave website says that I can cancel my ISA within 14 days of the initial deposit, can I cancel it before that and apply for one with A&L?

Should I bother with A&L or just stick with Icesave ISA?

Also, if I do stick with Icesave, does that mean I could (if I wanted to) transfer my ISA balance to a different ISA from April of next year?

FiscalFanny

Personally and speaking from experience (and from a professional client services view), I would go for Icesave.

I have had nothing but problems with A&L and am currently dealing with the FOS (Financial Ombudsman) with regard to their mistakes and despicable customer service meaning I have lost out financially.

Icesave on the other hand, so far so good. Easy application, fast efficient communication, although I have yet to actually transfer money in. But I plan to fill up this year's allowance as soon as I get my bank details cleared, then transfer my A&L ISAs to Icesave with a big two fingers up to A&L.

I am happy with the security of the Icelandic banks (just opened Kaupthing Edge savings account too - again so far so good), reading this forum and Martin's view, they have signed up to the banking code so the first £35k is as safe as a UK bank. Risk is small they'll go tits up, so that's good enough for me.

Fanny x

Degeneratemoo

Thanks for your reply.

Technically they aren't offering the same guarantee that a UK bank would should they go bust. The first £16,500 of any claim must be made through the Icelandic banking system, the remaining money can be claimed through the UK banking code.

I read a news article that said they have £88 million in their 'fall back pot' to cover accounts of over 1 billion, so were they to go belly up it's likely that some people would lose out.

That said, the chances of it going belly up are slim (as with any bank) but they are in the middle of recession....

Oblivion

I have to agree with FiscalFanny, A&L are hopeless. I gave up on their lousy administration and moved my money elsewhere.

If you're not happy with Icesave and their guarantee, how about one of the better UK building societies like Newcastle?

Dave.

FiscalFanny

Maybe you made your decision unconsciously before you posted your question then?

The reason I will move from one account to another is better interest rates and I will leave if I experience unacceptable customer service such as that at A&L. I don't pay too much attention to what ifs that are often blown out of proportion by the media and scaremongerers, especially when the chances are pretty slim of that happening.

We all make our own choices, based on our core values and attitide to risk.

Fannxy x

Degeneratemoo

Having now read other peoples comments regarding Icesave (follow up to Martin's blog, I know I know, I should have read all that first!) I've decided that perhaps it wasn't such a wise decision after all, thankfully I haven't put any money in as of yet.

How do I go about cancelling my account and will this prevent me from opening another ISA elsewhere before April next year? The site says I can cancel my account any time after the first deposit, nothing about cancelling it before then.

Thanks.

Lavendyr

Just to add to the crowd above, I bank both with A&L and with Icesave and can offer a perspective on both.

Icesave have always been brilliant - good customer service, clear website which is easy to use and feels secure, and I have not had any problems with them to date. I have both an ISA and an easy access savings account with them. Both have been opened with no problems at all, and I also transferred an ISA to them from NS&I which went through quickly and efficiently.

With Alliance & Leicester I have had difficulties in setting up accounts, DDs and SOs (from my current account), but generally their customer service has also been good. However, with A&L looking to be taken over by Santander, who have a terrible customer service reputation (case in point: Abbey), I am concerned that the customer service will drop off.

Apart from that, the key difference is that Icesave offer clear guarantees on their rates. A&L tend to offer 'bonus' rates which drop after a year. The ISA that A&L offer may look good now, but in a year it could drop like a stone. Icesave's rate is guaranteed to remain above the BoE base rate for several years. I have my ISA with Icesave because I don't want the hassle of transferring out in a year's time when A&L's rate becomes so low as to be uncompetitive (and possibly failing to beat inflation).

Although it's not a concern of mine personally, there is also, of course, the point that A&L themselves are not exactly secure. They themselves have stated that should the takeover with Santander fail to be approved by shareholders, the bank may find itself in financial trouble: http://news.bbc.co.uk/1/hi/business/7570048.stm .

Finally, it's worth pointing out that while the Icelandic pot may be short by a few million, at least there *is* a pot. The FSCS in the UK does not have any money actually set aside - it would come from levies on the banks signed up should the worst occur, meaning that *at the time* when one bank is in so much trouble as to need the FSCS compensation scheme, other banks have to be able to stump up. Neither the FSCS scheme nor the Icelandic scheme has ever been tested. In conclusion, there are no guarantees on either scheme and I personally would not use them as major factors in my decisions as to where I save my money. I would recommend considering more immediate concerns such as interest rate on offer, availability of access to money, customer service and so on.

Degeneratemoo

Well having looked a bit further into things, the offer by Principality seems fair (currently 6.00%), I know they don't offer any guarantees regarding the rate but everything else seems fair enough (I think!).

I've sent an e-mail to Icesave to see what they say about cancelling it, we'll see when/if I get a reply...