Icesave: how safe are your savings? Facts and myths

sly_dog_jonah

If you've got a direct debit deposit into icesave pending - or one went out very recently - try contacting your current account provider and cancelling the direct debit arrangement, and if applicable try to recall any recent DD under the Direct Debit indemnity agreement.

I had a £1000 DD which went through yesterday, and another (£2600) due to occur on Thursday, both of which I've been able to recall/cancel through my current account provider nationwide. I couldn't get onto icesave to cancel thursday's transaction, so went for the nationwide route.

That just leaves the question of what happens to the ~£3k from my previous tax year that's sitting in the account, which I requested Natwest to transfer yesterday in branch (My deposits this week were to use this year's allowance to avoid problems with subscribing to two ISAs in a tax year, the £3k from last year was transferred from Barclays to icesave earlier this year). Hopefully by the time Natwest request the ISA transfer this mess would have been sorted out.

Pilotboy74

Even more concerning is that the whole country is in danger of going bankrupt. 2 of the 3 major banks have now gone bust....how long is it going to be before we get our money back...?

born2run

From the BBC

Customers of the Icesave internet bank have been warned they will probably have to claim compensation for money held in their savings accounts.
The authorities in the UK are preparing for the bank's parent in Iceland, Landsbanki, to be declared insolvent.
The Icelandic government took control of the county's second biggest bank this morning to stop it collapsing.
Claims from Icesave's UK customers will be handled by the Financial Services Compensation Scheme (FSCS).

Under the depositor protection arrangements in Iceland and the UK, the Icelandic authorities will be liable for the first 20,887 euros (£16,300) of compensation.
The UK's FCSC will pay out the rest of the claims, up to the newly introduced ceiling of £50,000 per person.
A spokesman for the FSCS said however that UK customers of Icesave will not have to make two separate claims and that it would probably handle all UK claims on one form.
"We are working with the Icelandic authorities to confirm the procedure," a spokesman said.
"We are gearing up to be ready to do whatever we can in order to get compensation back to UK savers as quickly as possible." he added.
Insolvent
The Financial Services Authority (FSA) said it was expecting Icesave's parent bank to be declared insolvent soon, following its takeover by the Icelandic Financial Supervisory Authority (IFSA).
Icesave says that it is not currently allowing customers to take money out of their accounts or to put in deposits.
Landsbanki is the second Icelandic bank to be taken over to prevent a collapse of the country's banking system.
In an announcement on state radio, the commerce and banking minister Bjorgvin Sigurdsson said the board of directors of Landsbanki had been dismissed and the bank put into receivership.
He said the state takeover was made "in co-operation" with Landsbanki and the bank would stay open and operate as normal. Glitnir, the country's third-largest bank, was nationalised last week to stop it being driven into bankruptcy by the international financial crisis.

Zimmy_2

Martin has updated here:

http://www.moneysavingexpert.com/savings/safe-savings#iceland

born2run

Zimmy thanks for the link - I'm feeling slightly more confident that we are not going to be left out to dry!

Martin - thanks for keeping the pressure up on all UK depositors behalf!

sly_dog_jonah

Assuming we have to go down the compensation route to get our ICESave deposits back, what would happen to the tax status of ISA deposits? Would the taxman allow us to transfer this compensation to a new ISA? or would we lose the tax-free status on any subscriptions to date? I'm lucky in that I've only got 1 previous year subscription with them, but for other people there could be year's of subscriptions.

PuppetMaster_2

Apprently the Prime Minster of Iceland, Geir Haarde, late last night addressed the nation and warned:
"In the perilous situation which exists now on the world's financial markets, providing the banks with a secure life line poses a great risk for the Icelandic nation," Haarde said in a televised address to the nation. "There is a very real danger, fellow citizens, that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could be national bankruptcy."
Really doesn't sound good :sad:

I too was wondering what happens with regards to compensation and ISA tax status - can't seem to find anything about that as yet...

born2run

Obviously the ISA deposit tax status situation is an issue (hopefully sorted out via an admin process when FSCS finally sort out compensation payments) but to be honest if the building's on fire I'd just be relieved to get out in one piece!

jamielovell

I'm concerned too about the ISA tax status. As well as a £5000 fixed bond, I have 3 years of ISA allowances (now worth around 10,000) in the account (most of it my old student loan!). Had just opened a new fixed bond last week, but fortunately phoned Lloyds and managed to cancel the direct debit this morning, so will be just under the 16,000 Iceland guarantee limit.

wadeall

The Icelandic gment has borrowed Euro 4 bn from the Russians. The PM said they would have preferred to tap their "friends" but these traditional friends were not interested so they had to find new friends. Basically the loan will have big political strings. Presumeably support for Russia's claims on the Arctic and a distancing from NATO. Whether E 4bn is enough to keep the icelandic Gment solvent is not clear. At the moment the first GBP16k of depositors funds is the responsibility of the Icelandic Gment. Obviously the UK Gment and authorities are trying to figure out wat to do next. I would say 95% chance they will end up guaranteeing all the first GBP50,000 and a 80% chance they will stand by the whole amount of people's exposure. We'll probably find iut for sure in the next few hours.