Passport Scheme. Is it backed by governments?

Bromley86

I thought that the passport scheme was a guarantee that the home country of a bank would guarantee the first ~20k euros. How they did this was up to them (i.e. ante or post funding), but ultimately it was backed by a government guarantee. So, as long as you don't mind a possibly longer wait, and as long as the country doesn't go bankrupt, it's just as good as a UK guarantee.

I've been looking at an english-language Iceland news site. A poster in the discussion area said that the guarantee is not required to be backed by the home country's government and that the Icelandic one is not. Having read through the relevent directive and the Icelandic law that's based on it, I have to say that I think he's probably right. I say "probably" because I think EU lawyers still get paid by the word .

So does anyone know? Anyone have a link to a plain english description of the EEA guarantee/passprt scheme that clarifies whether it has to be government backed or not?

Also, did the Icelandic government say that they would back the guarantee before 7th October? I've read statements from Icesave employees saying that it was government backed (and in turn backed by all the Nordic countries), but that's obviously not the same as the government saying it.

nilrem_2

Whatever the 'blurb' said about the passport scheme most of us who invested in Icesave were led to believe that our cash was well covered both by the FSCS and also by Iceland, I don't suppose any one of us ever imagined what could have happened, I suspect few of us waded through all the legal jargon and I doubt we would understand it if we did.

What it has illustrated to me is that the Passport scheme is flawed and gives no guarantee that you will get your cash back in the event of any problems.

Reaper

While I'm not familiar with each country's arrangements there is no need for the scheme to be government backed. The UK's FSCS is not meant to be government money, it is a scheme put togther by the banks, though the government has stepped in to prop it up.

You ask about the Nordic countries - they had a non-binding Memorandum of Understanding that they would help each other out in a financial crisis. This was assumed to mean they would fund each others compensation schemes if it came to it but although the Icelandic PM said they had been very helpful (unlike UK/USA) no money seemed to be forthcoming to pay the missing compensation. Didn't sound that helpful to me.

soulsaver

The 'euro area' banks with high profile operations here(UK) are Dutch(ING,AK) Spanish (Santander-Abbey, B&B, A&L) Irish (AIB, BoI) & Cypriot BoC)now that our Icelandic friends have left us (cold). Irish Gov say you're 100% covered to 2010 but are only Euro ratified to e100k; Dutch are e100k and Cypriots afaik are still e20k & topped up by UK FSCS to £50k compensation; Spanish are not passported, so covered by UK FSCS. I have asked before if this means there no compensation scheme in Spain...which would be frightening for the Spanish depostors. However I have to say I wouldn't trust a passport scheme to Spain with their arrogant and illogical laws and history of govt corruption...

nilrem_2

From all the worry I have had with Icesave I have to say that I am no longer happy to save my cash with anyone not offering the full £50k FSCS scheme, even people who saved just £16k or less stood to lose the lot when the Icelandic government refused to honour their passport scheme, therefore keeping ones cash below the £50k ceiling is no guarantee that you would not lose a great deal of money, the passport system seems flawed to me.:eek:

StarRover

soulsaver wrote: »

However I have to say I wouldn't trust a passport scheme to Spain with their arrogant and illogical laws and history of govt corruption...

I'm afraid I wouldn't trust (another) passport scheme anywhere!

Bromley86

Thanks guys. I can't believe no one in the press has picked up on this. Well, having read that FT article on the Mathiessen-Darling transcript, maybe I can.