Where's My Kaupthing Cash?

If you tried to make a transfer from your Kaupthing Edge savings account this week -- and you're still missing your money -- here's what may have happened to it.

Since yesterday's take-over of Kaupthing Edge's savings accounts by ING Direct UK, there's been a flurry of very worried activity in the comments space below the article I wrote reporting the move.

We've even had phone calls to our office. Many Fools are very concerned that CHAPS transfers made from their Kaupthing Edge savings accounts have not been completed.

Money seems to have been debited from these Kaupthing Edge accounts, but has not arrived at the destination accounts nominated -- despite the fact that a CHAPS transfer fee for the transaction has in some cases been charged.

And for the savers in question, this is truly scary.

Concerned Kaupthing customers from the Isle of Man should read this article, as it contains more relevant information for them.

So what happened?

Today, I have spoken with APACS (the UK Payments Association), the Financial Services Compensation Scheme and a spokesperson from Kaupthing Edge.

The bad news is that there's some confusion over exactly what's happened with these missing CHAPS payments.

But the good news is that everyone I spoke to was keen to assure savers they'd get all their money back.

APACS

According to APACS, any CHAPS transfers that were set up on the evening before ING Direct's takeover of Kaupthing Edge savings would not have been due for processing until banks reopened the following morning. By this time, unfortunately, a freeze on all Kaupthing accounts was in place.

Although CHAPS transactions are supposed to be same-day transfers, most banks have a cut-off point in place -- typically around 2pm -- after which no more transactions can be processed that day.

If you missed the deadline for authorising a CHAPS payment from your account this Tuesday, or tried to organise one yesterday, APACS says the transaction will not have been processed. This is due to the freeze on accounts which was, by that time, in place.

What does this mean for my money?

According to APACS, this processing problem means that although some people's money appears to have been moved from Kaupthing Edge, it has not in fact left the bank.

While customers' on-screen statements might show that money has been moved, it is actually still with Kaupthing Edge -- now under the control of ING Direct.

So, any money that you have tried to transfer out of your Kaupthing Edge account should automatically reappear on your statement soon -- although APACS says it's difficult to say exactly when this will happen.

If APACS is right, ING Direct will now need to trace the transactions customers have made and ensure that everyone's money is returned to them -- which I think might take some time.

APACS' advice

APACS' main message was that people in this difficult situation should try not to panic -- and should keep an eye on their account for the return of the sum they have tried to transfer.

However, the APACS spokesperson I talked with this morning did say it's important that customers who have attempted unsuccessful transfers print off records of this, and any other recent activity on their accounts, and keep them safe.

Having evidence that you've paid for a CHAPS transfer which has not been properly processed should mean you are ultimately able to reclaim the fee for it.

Kaupthing Edge's comments

After a prolonged telephonic wild goose chase, I finally managed to speak with someone at Kaupthing Edge this afternoon.

Bizarrely, it accounts for the missing CHAPS money in an entirely different way to APACS...

A technical glitch

According to Kaupthing Edge's spokesperson, the problem with customers' CHAPS transfers is entirely unrelated to the events of yesterday.

They put the `disappearance' of some customers' transfers down to a technical glitch: a problem between Kaupthing Edge and the CHAPS clearer, Royal Bank of Scotland (RBS).

According to Kaupthing Edge, this problem was spotted well before the bank's savings accounts were transferred to ING Direct.

As such, Kaupthing Edge is working with RBS to resolve the problem.

However, the person I spoke with could not confirm whether the money in question will be bounced back to customers' Kaupthing Edge accounts, or forwarded on to the destination accounts originally nominated.

But, whatever happens, the money should eventually turn up. It's simply a matter of: where?

The FSCS

Britain's FSCS has been involved with the take-over of Kaupthing Edge's savings accounts by ING Direct -- so it has its own part to play for consumers.

The FSCS contributed money to facilitate the transfer of Kaupthing Edge's internet savings accounts to ING Direct, and helped ensure the money in those accounts is protected.

However, Kaupthing Edge and Heritable Bank customers whose accounts are not operated online did not have their savings accounts transferred to ING Direct.

This affects around 3,000 Kaupthing Edge customers and 100 Heritable customers. These people will now be contacted directly by the FSCS so that they can claim whatever compensation is due.

So is my money safe?

As I said at the beginning of this article, the good news for Kaupthing Edge customers is that everyone I've spoken to today is sure they'll get all their money back.

The spokesperson from Kaupthing was especially keen to reassure customers that they wouldn't lose a penny.

So I'd advise Kaupthing Edge savers to try and stay calm -- and watch all their accounts very carefully over the next few days to see if (and where) their missing money turns up.

I know this is an incredibly stressful time for anyone with savings. It's terrible to wonder where your hard earned cash has gone -- but the message from everyone I talked with today was to stay calm and hang in there.

Hopefully, in line with what I've found out (and no matter which version of events turns out to be right), ex-Kaupthing Edge customers will soon be able to breathe easier again.

More: What The Government Bail-Out Means For You | The £50 Billion British Bank Bail-Out | Ensure Your Savings Are Safe!