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£800m payout to Iceland savers will begin in days
Nicholas Cecil, Chief Political Correspondent06.11.08
SAVERS whose money has been frozen following the Icelandic banking crash can expect to get compensation within days.
The Government said today it is making £800million available to compensate savers who lost money through the collapse of internet bank Icesave.
Chancellor Alistair Darling said the money was being transferred to the Financial Services Compensation Scheme to pay out to savers with deposits above the £50,000 limit covered by the scheme.
About 230,000 Britons lost money in Icesave when its parent company Icelandic bank Landsbanki was put into receivership last month.
The FSCS is expected to begin paying compensation to savers next week, and it hopes to have paid the majority of claims by the end of this month.
It sent out emails to Icesave customers yesterday setting out how the compensation process will work.
These will be followed by a second email, sent out in batches, giving people instructions on how they can log on to their existing Icesave accounts and complete an electronic process enabling them to receive their money.
The cash will then be paid into an account of their choice within five days by electronic transfer.
The FSCS normally covers only the first £50,000 held in a savings account, rising to £100,000 for couples.
But on 8 October, Mr Darling pledged that no depositor in Icesave would lose any money.
Compensation for the first £50,000 lost by savers will be provided by the FSCS, with the Bank of England initially providing a loan facility, while the Government will top up payments above this limit.
The compensation process for Icesave customers has been speeded up. It usually takes up to four months for people to receive money after a financial institution collapses.
The Treasury said discussions with the Icelandic government over recovering savers' money were "ongoing".
The first £16,951 that people have lost should be covered by the Icelandic depositors protection scheme.
Reader views (3)
This is all fine and well BUT what about all the people that have been fleeced by the banks etc over the last 10 years or so with grossly unfair overcharging on their accounts? When are they to receive full compensation? After all, this was permitted by both our government and its regulator the FSA!
- Fraser, Telford Park
Again: moral hazard! This state Nu Labor Brown seems more to help people who received higher interest in savings compared to people who were more safety conscious. Remember who has to pay higher interest has a higher risk! But not Crash - he pushed another mistake through.
- Georgie, Islington, London
Why should we have to bail out people who invested in Iceland. The only thing people could see was a £ sign when investing. They didn't care that there was nothing actually behind the front door. Greed over came sound investement logic. There should be no compensation.
- David, London
