Treasury pumps in cash to cover Icesave compensation

Thursday, 06 November 2008 01:01

Alistair Darling today announced the government was pumping £800 million into the Financial Services Compensation Scheme (FSCS) to help cover payments to Icesave customers.

The Treasury is lending the cash to the scheme to cover the £4 billion payout to Icesave UK customers.

The FSCS this week started contacting Icesave customers by email instructing them about how they will get their cash back.

There are over 200,000 Icesave customers who have been able to access their accounts since early October and when cash is returned - which could take up to five weeks - no interest will have been earned from October 6th.

Normally the first £50,000 is only covered by the FSCS per bank.

However, in the case of Icesave, the chancellor said all savings would be protected, despite the fact Icesave was a branch of Icelandic Landsbanki and so initial compensation should have come from Iceland.

This week Mr Darling maintained his position that he was right to use anti-terror laws to close down Icelandic banks and pointed out the Icelandic government and its financial compensation scheme had still not paid up for Icesave losses.

Fears are now rising the refund of Icesave cash could lead to criminals trying to scam savers.

Former Icesave customers are being told by the FSCS that the scheme will not be contacting them by telephone or by email asking for bank account details - and any such contacts should be considered as illegal phishing attacks.

After an initial email, savers will be sent a second email asking them to log into the Icesave account as normal

Problems have also arisen as some email filters are adjudging emails from the FSCS to be spam.

Any Icesave customers who do not receive their first email from FSCS by the close of business on Friday should contact FSCS on 0845 7300 131.

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