Compensation process begins for Icesave customers
Earlier this month there was widespread panic amongst consumers, charities, local authorities, and businesses when the Icelandic bank Landsbanki collapsed, leaving many people, firms, and agencies that had put money into high interest Icesave accounts wondering whether they had lost all of their money. The panic became worse after it was revealed that the Icelandic authorities were failing to honour obligations with regards to compensating UK consumers.
At this stage the UK government stepped in and said that it would offer a 100% guarantee on money in UK Icesave accounts, and many consumers breathed a sigh of relief. However, no guarantee was made to local authorities or charities, many of which had placed millions of pounds into these accounts due to the high rates of interest being offered. In addition, those with money in Guernsey Icesave accounts were told that they were not covered by any compensation scheme, as Guernsey does not operate such a scheme, and because the accounts are considered to be off-shore the money would not be protected under the UK guarantee. As a result savers in Guernsey have ended up losing all but 30% of their money.
For consumers in the UK, however, the problem has been sorted out, and as a result of the guarantee from the UK government savers should receive back all of their money by the end of November, which will be a relief for those planning to use some of their savings for Christmas. The Financial Services Compensation Scheme in the UK has already started contacting the tens of thousands of consumers that had Icesave accounts, and officials have said that consumers can follow a simply online claims process in order to get back their money.
One official from the Financial Services Compensation Scheme said: “They’ll be guided through the FSCS claims service so they can access their savings , view their balances and then transfer their money to their linked accounts. The money will then be paid by BACS into their linked accounts within two to three days after that’s been completed.”
He added: “We anticipate we’ll be completing the whole process so the vast majority of retail customers will receive their money during November.”
Those with Icesave accounts in the UK do not need to take any further action, and simply need to wait to hear from the FSCS with regards to their claim. Once they have completed to claims process the transfer of their cash will be sorted out pretty quickly, and they will receive back 100% of the money that they had in their Icesave account. The move means that tens of thousands of consumers will be getting back pretty sizeable amounts of cash in some cases, and at the end of November there is likely to be a flurry of activity as recipients of the refunds try and find alternative savings accounts for their cash. However, it is unlikely that many will turn to foreign banks, as a recent survey revealed that many consumers are now wary of placing their money with foreign banks in light of recent events.
Tags: uk, Business Finance, BACS, linked accounts, result, banking crisis, icesave, interest
