Iceland - How the money was returned to savers & who pays

thelawnet

evenasus wrote: »

Maybe the OP is making the point, that the government need not have reimbursed the Icesave savers the whole amount of their savings.
After all, the savers knew what they were doing when they put their money in there.
If the rules had been stuck to, the bill to the taxpayer wouldn't have been as high.

Do you have any numbers on that? We had £60k in Icesave joint account, it was supposed to be covered, which is why I left it there, that is until it turned out that the Icelandic compensation scheme, which the FSA had permitted, was empty.

Paul_Herring

nilrem wrote: »

And FWIW savers with Icesave did know what they were doing as the bank was fully authorised by the FSA and run from the UK, it was also endorsed by the media and advised as being as safe as any UK bank.

Um - it wasn't, at the time, fully backed by the FSCS though - only money after the first ~£16K was. (A point that wasn't made entirely clear until after the fact; most, I'm sure, thought the FSCS backed everything past the limit that Iceland wouldn't back, not what it said it would back - a difference of £16K in the end since Iceland turned around and said they wouldn't be refunding anything.)

cvd

In my opinion, what was wrong about the bailout was the decision to honour the unrealistic interest rates that were being paid by these Icelandic Banks.

Of course honouring these interest rates (instead of some realistic rate or no rate at all) made only a small difference to the total cost of the bailout - but I feel it was a fundamentally immoral act.

bryanb

cvd wrote: »

In my opinion, what was wrong about the bailout was the decision to honour the unrealistic interest rates that were being paid by these Icelandic Banks.

Of course honouring these interest rates (instead of some realistic rate or no rate at all) made only a small difference to the total cost of the bailout - but I feel it was a fundamentally immoral act.

On easy access accounts the rates were not honoured, however the rates on fixed term (which were regarded as contracts) were honoured. This allowed the Government to say "No retail saver has lost money" or words to that effect.

tradetime

cvd wrote: »

In my opinion, what was wrong about the bailout was the decision to honour the unrealistic interest rates that were being paid by these Icelandic Banks.

Of course honouring these interest rates (instead of some realistic rate or no rate at all) made only a small difference to the total cost of the bailout - but I feel it was a fundamentally immoral act.

Having placed money across a range of accounts, the Icesave account was at best 0.7% above the others, and at worst 0.2% below so not really sure what you are talking about, as for "fundamentally immoral" great choice of big words.

nilrem_2

Paul_Herring wrote: »

Um - it wasn't, at the time, fully backed by the FSCS though - only money after the first ~£16K was.

I did not say that it was, what I said was

the bank was fully authorised by the FSA and run from the UK

I never actually mentioned the FSCS in my post

Paul_Herring

nilrem wrote: »

I did not say that it was, what I said was[...]

And FWIW savers with Icesave did know what they were doing

My point was they didn't, because the FSCS rules were not made clear.

neil324

:beer:Cheers for the bailout.

LesU

tradetime wrote: »

Having placed money across a range of accounts, the Icesave account was at best 0.7% above the others, and at worst 0.2% below so not really sure what you are talking about, as for "fundamentally immoral" great choice of big words.

Thank you for at least attempting to put this 'fairy story' to rest. I keep reading in these forums about how the Icelandic banks were paying ludicrous interest rates that were obviously unsustainable. Well, that must have been a different bank to the one I had money in.

ManAtHome

Yes, I can't remember much in the way of ludicrous rates either (weren't they always trailing ICICI). I have close to 7% with 3 UK building societies - sure I'd have noticed if Icesave were offering, umm, 10% plus...