'Icesave... angry, frustrated and upset...' blog discussion

Gawd's sakes, Martin, there's nothing to apologise for!

The Icesave "product" was always governed by split compensation coverage, and must surely have always been understood to be so by those who went for it.

I didn't, and I suspect many others here didn't either, precisely because of that complexity: when the worst comes to the worst, the last thing you ever want to do is get caught up in a tangle of who-pays-what / who-pays-when.

So if that reality was apparent to people like myself, how come it wasn't apparent to others? The answer is: I suspect it was. But they decided -- as they were entitled to do -- that hey, a worst-case scenario is the stuff of fantasy, so why worry about a compensation issue that will never arise?

This doesn't mean I'm unsympathetic to the 300,000 savers now caught up in the Icelandic mess. But it does mean that the decisions they took were theirs and theirs alone: neither you as an individual nor MSE as a forum bears the remotest responsibility.

Whilst posting here, can I also clarify the situation re Kaupthing Edge, because it's likely that many who stayed clear of the IceSaver product went to KE instead.

KE's 'product' is administered through its UK subsidiary. That subsidiary is within the FSCS programme (up to £50,000). The question of Icelandic compensation does not arise.

In recent days, however, it became apparent that a worrying ambiguity had arisen over the question of account novation, i.e., the moving out of savings held by KE's UK subsidiary into the main bank itself, thus resulting in exactly the fraught compensation situation which bedevilled the IceSave product.

The ambiguity occurred because KE's website promised that any account novation would be subject to 30 days' advance notice -- fair enough, I thought. But then the revised Terms & Conditions (June 2008: I missed 'em at the time) omitted any mention of 30 days' notice, and instead appeared to imply that novation could occur at time-of-notice.

I mentioned on MSE the urgent need for clarity here and I am sure I was not the only MSEr who transferred out the bulk of their savings from their KE account, pending clarification from Kaupthing Edge of just what it meant: a 30 day notice / no notice at all.

I'm also sure I wasn't the only MSEr to contact Kaupthing Edge seeking that urgent clarification.

Kaupthing Edge has responded by issuing new Terms & Conditions which delete any reference to novation. Kaupthing Edge has also deleted reference to novation from its web page.

In a further step, the Chairman of Kaupthing Edge has issued a statement which says -- explicitly -- that UK savers accounts are "permanently held" in the UK subsidiary.

That being the case, KE savings are within 100% coverage of the FSCS provision (up to £50,000).

It has, I believe, acted quickly, and fairly, and as I've had nothing but the best possible service from it in the past, my hope is that it will indeed long continue.

I am now transferring back to my Kaupthing Edge account the savings which were withdrawn.

I set up a substantial withdrawal from Icesave at the end of last week, which has yet to materialize in my linked current account. I also have significant standing orders set up from what remains in my Icesave account. I realize that withdrawals have now been suspended, but don't know whether the transfer will take place (despite it being shown on my online statement) or whether the standing orders will be paid. My attempts to contact Icesave by phone and email have got nowhere. Any information would be welcome.

(PS after the weekend newspapers' coverage of the crisis, including Iceland and its banks, a run on Icesave was inevitable.)

l33tsp33k wrote: »

Where are Brown and Darling when the country needs them? It's not just Icesave which is in trouble, RBS and HBOS are both going down the tubes if today's share price moves are anything to go by, and we now risk a run on the whole UK banking system if they don't do something serious, such as:

1. guarantee all deposits in all banks operating under the FSCS (including banks operating in the UK under the "passport")
2. do something urgently to shore up the capital reserves of all banks.

Preferably EU-wide action please, and today, not next week or when it's politically expedient to announce it.

GORDON, WHERE ARE YOU?!

Oh, come on. Gordon's where he's always been throughout his watch as the UK's Chancellor of The Exchequer.

Nowhere at all.

Hopefully this experience will not change Martin, to whom most of us are extremely grateful for the information and advice he has given us to help us with our consumer revenge.
Martin, please don't change.
Hopefully I will retrieve a large part of my savings which I decided to deposit in Icesave.

I've got my last five years' cash ISA savings in Icesave and I too would just like to know whether the accrued interest will be included in the compensation and whether when it comes through, it will retain its tax-free status as an ISA transfer.

Perhaps naively, when I heard Landsbanki had been nationalised, I sort of hoped it would be like Northern Rock where the money is safe and may even earn slightly more interest to retain depositors. It sounds like that is not to be.

I also agree with 'Codger' that Martin cannot be reproached. I did pick up on the proviso warning about the passport compensation, but who thought things would ever come to needing a compensation scheme. I was just on the verge of starting the transfer process to NatWest for the better interest but then heard that its parent company, RBS, was looking none too healthy either. Ah well, turbulent times.

I just hope Martin manages to get some concrete answers to his and our questions and can mention them on tomorrow's It Pays To Watch.