The are your savings safe guide, has a special section, updated three times a day on all the issues impacting Icelandic bank custsomers.
All Updates: All latest info in the full Icesave, Kaupthing, Heritable section
The site is burning with confused Icesave savers today, rightly worried about the news of possible nationalisation and collapse. At the moment it’s a battle to get answers from anyone, and frustrating not to be able to answer people’s questions. I’ve spoken to the FSCS, Icesave itself and the treasury today, but answers aren’t forthcoming
Should Icesave have ever been recommended?
Icesave, of course, has been recommended many times on this site, after all, it’s a UK regulated bank which had great rates. Yet for the last seven months, every note on the site that mentions Icesave has included a large WARNING, explaining it’s not protected like other banks due to the ‘passport exemption’ system, plus an explanation of the (then) £35,000 limit and what it means, and a big link to the spread your savings guide and last april’s Icesave: is it safe? blog.
My stance was, is, and will be, that we choose best buys based on rate, and explain the protection system where it differs, so people can make their own decisions. The savings safety guide has been read millions of times, is top of google, and has led the weekly email on countless occassions over the last few months…. we’ve done our best to communicate the situation.
Yet ultimately, the financial world has been turned upside down; we’ve seen once immovable bastions like Goldman Sachs, Merrill Lynch in trouble and Lehmans, as well as household names like Bradford and Bingley, go kaput. Knowing where the crunch will bite next simply isn’t possible. That’s why I’ve always focused on the protection system rather than how stable any particular bank is.
Frankly right now it’s a terrible scenario, and if I’m honest I feel emotional about it, yet rationally I know I can hold my head up high, because unlike many blind recommendations elsewhere on the web or in newspaper best buys, this site has consistently included the protection information and explained it at every point, so people can work out the risks and decide for themselves. There was little else we could’ve done, even with hindsight.
It’s also worth mentioning the scale of this site is also an issue. As I wrote in the original Icesave blog, the weekly email is my main communication mode to tell people news. If I write “get your money out” of any bank in there, as it goes to 2.5m that has a potential to cause a run on the bank, if I do that, I genuinely would be to blame.
But it’s time to take a deep breath and stay with the story, to work out how to best ensure people’s money is safe and carry on.
Press release sent today.
Unfortunately gathering information isn’t easy right now. Nonetheless, I thought you’d be interested in the brief press comments I sent out today.
Tuesday 7 October 2008
“As news floods in about Icesave, it’s crucial the UK Government clarifies its position, if not it’s unfairly leaving people panicked and worried. Countless small savers have a few thousand in Icesave’s best buy cash ISA. The ISA scheme was set up by this Government to encourage savings, and as such it has responsibility.”
“While I hope it won’t come to that, if the compensation scheme is needed, Icesave’s structure means the first €20,887 must come from the Icelandic compensation system and the remainder of the £50,000 protection from the UK scheme. Meaning its smaller savers have the most to worry about.”
“But what if Iceland can’t pay this compensation? While it’s said to have a reciprocal arrangement with other Scandinavian countries to protect its compensation scheme, the UK should be prepared to step in if necessary.”
“Yet the Treasury isn’t answering whether it will pay that money if Iceland can’t. It needs to assure UK savers that the whole £50,000 will get to them one way or another. I first asked this question six months ago; it wasn’t answered then, it hasn’t been answered yet and now it’s almost too late.”
“UK savers have been told their savings are safe in British banks. This protection is two pronged; first the Government says it’ll step in, as in the case of Bradford and Bingley and Northern Rock, and then as a belt and braces protection we have the Financial Services Compensation Scheme protecting £50,000 per person, per institution.”
“Unlike Icesave, banks thought of as ‘foreign’ like Kaupthing and ICICI are actually UK banks fully governed by FSA regulators; it’s only their parent companies which are from overseas. Due to their high rates they have billions of UK savers’ money in them and they are fully protected by the £50,000 scheme.”
“Yet does the Government see these as ‘UK Banks’ and would it bail them out if there were problems or is it only the last resort compensation we can rely on? This needs an answer… Mr. Darling, what is a British bank?”