The UK government is going to lend £3 billion to Iceland to help UK Icesave customers to get their money back. Here’s what you need to know…
There’s some good news for savers in Icesave this week after the Financial Times reported the final touches are being made to a plan to lend around £3 billion to Iceland so it can repay UK depositors in Icesave.
Many Icesave customers have been concerned about their deposits after the Icelandic owner of Icesave, Landsbanki, collapsed. However, if the agreement between Iceland and the UK goes through, it should help speed up the process of returning money to savers.
According to the Financial Times report, a delegation from the UK Treasury and the Bank of England will arrive in the Icelandic capital of Reykjavik this week to finalise the terms of the loan.
The Icelandic government is responsible for paying the first £16,189 of any compensation claim, while the UK government must cover the difference up to £50,000. In this instance, the UK government will also pay any additional claims of more than £50,000.
When will I receive my money?
This is really encouraging news, but the main question on everyone’s lips is how much longer will it take for savers to finally receive their money?
Frustratingly, it is still not clear and the Financial Services Compensation Scheme (FSCS) will not be pinned down to a timeframe. According to a spokesperson, the FSCS hopes to return money to customers as soon as possible, but it cannot say how long this will take. The FSCS hopes to issue an update by the end of this week, according to its spokesperson.
If a deal is agreed, it’s important to note it will not cover corporate and government account holders in Icesave. Offshore customers, such as those of Landsbanki Guernsey, will also not be covered due to the lack of depositor protection offered in these islands, as fellow Fool Cliff D’Arcy discusses here.
What about Kaupthing Edge customers?
For those UK customers still waiting to find out what happened to money they tried to transfer from their Kaupthing Edge savings account before the takeover by ING Direct, there is also some positive news.
According to the latest update on Kaupthing Edge’s website, confirmation has been received from Kaupthing Edge’s administrators that all outstanding payments will be released by today (Thursday 23 October) and these are expected to start arriving in customers' bank accounts tomorrow.
Regarding those Kaupthing Edge customers whose accounts are not operated online and did not have their savings accounts transferred to ING Direct, the process of compensation is ongoing.
According to a spokesperson for the FSCS, forms have already been sent out and they are now starting to receive the completed forms back from customers. Again, no timeframe could be given, but the spokesperson said compensation claims would be completed as quickly as possible.
So hurrah, finally there is some positive news for onshore savers and hopefully everyone will get their money back soon. I only wish I had some better news for all those less fortunate offshore customers.