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Icesave was once a relatively obscure Icelandic bank offering a High Interest Account and a Cash ISA with a better than average savings rate. Now thousands more people are aware of the Icesave name - unfortunately that's because the bank has come crashing down in a dramatic fashion, freezing all the accounts and the money in them! I know the bank is called Icesave but I didn't imagine that would actually involve freezing my cash!
Yes - unfortunately, I was one of those many savers who was attracted by the high interest rate offered by Icesave. I didn't know a great deal about the bank when I first opened an ISA with them during the 2007-2008 tax year. I was just interested in the fact that I would earn more interest with them than with a standard High Street bank. I was also pleased that it was an internet only account. No messing about going into branches, filling in lots of paperwork and wasting time that way. Opening the account online was very quick and straightforward. I received the forms through the post within a few days and transferred the £1000 minimum deposit online without any problems. I was able to access the account easily and later made subsequent deposits, building my total investment in my Icesave ISA to the grand total of £2,500. Until a few days ago I was quite content that my money was sitting in an obscure online ISA and wasn't overly concerned about who operated the account and what state their own finances might be in. To be honest, I was more concerned with my own finances.
Now, thanks to the bank going 'bump', I know that Icesave is part of the Landsbanki group which has suffered as part of massive problems within the Icelandic financial system. I still don't fully understand the whole credit crunch issue but, essentially, Icelandic banks have been hit by all the problems that other international banks have experienced and Icesave just happens to be the bank that crashes. Just my luck! I'd have been better off blowing the lot on a horse on the Grand National! (Incidentally, I did back the winner this year!) As a small nation, Iceland's government haven't been able to bolster up their own banks, as the UK has been forced into doing.
Today, I logged into my Icesave account online just to get an update on how much money I did actually have tucked away in there. I logged on easily, ironically, but the ominous signs were there on the homepage telling me that Icesave were not currently processing any withdrawals and directing me towards the UK Treasury website.
The Treasury have issued a statement on their website assuring all those UK savers who have put their savings in an Icesave account that they will not lose any money. Unfortunately, there is no indication of any timescales and I would expect this to be a long drawn out process before I get my hands back on my own money!
"The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their Deposit Insurance Scheme to ensure that depositors are paid back as quickly as possible. The Chancellor has also spoken to the Icelandic Finance Minister about the importance of the Icelandic authorities ensuring that UK depositors in Icesave are given the same protections as depositors in Iceland and receive their deposits back in full promptly."
The Treasury also reassures me that my ISA will continue to benefit from its tax-free status. Just a shame that it's been put on ice!
There is a lesson here, I think. With most major purchases, I do loads of research around value for money and whether the company involved is a reputable one etc. This is where review sites such as DooYoo are invaluable. Unfortunately, I didn't take the same precautions when opening a savings account as I just believed that banks were beyond reproach and that a bank account was the absolute safest place that you could put your hard-earned cash! Now, in the current financial climate, everybody needs to do some research into the stability of the banks and institutions involved as nowhere seems to have escaped the current problems. Fair enough, savings are guaranteed up to £50,000 under the current financial compensation scheme but it would be much less hassle avoiding having to claim compensation! I'm certainly not looking forward to going through that and I'm not holding my breath that I'll be reunited with my money any time soon!
Edit 2009: Pleased to confirm that I was reunited with my cash surprisingly quickly - before Christmas 08 in fact!
I recently opened up both a savings account and an ISA, both took a week to get up and running including the initial transfer of funds. Beware though once you have the account(s) you need to log into Icesave to initiate any further transactions both into and out of the accounts. These have to be set up with 3-4 workings days ahead of when you want the transfer, you want it any quicker and you will incur charges. Once they have your money it goes through a drawn out "processing" stage taking up to SEVEN business days before the money is in your cleared balance. Icesave state that the money starts earning interest from the moment it is received so it is working for you whatever the processing involves. Even inter-account transfers seem to take a few days so if you are happy to put up with a few days delay here and there and can plan your transfers well you will find these are very easy to operate, no charges and a very good rate of interest to boot.
**** UPDATE 9.10.08 ***
As you might be aware, IceSave has been declared as insolvent in the UK in October 2008.
Read my review below as there are a few warning signs that perhaps I hadn't quite noticed, such as difficulty in opening an account.
IceSave are not fully covered by the FSCS (Financial Services Compensation Scheme). They were covered up to £50,000 jointly between the Icelandic and UK funds but the Icelandic government has backed out from paying non-Icelandics. The UK government is threatening legal action to Iceland, potentially they could be sued for fraud or even worse, they could be potentially be sued for racism since Icelandics continue to be covered by the scheme whereas British and Dutch savers have been told they will not.
Fortunately, the UK goverment has stated that they will cover UK savers who have lost money. Dutch savers are not so lucky, they are unlikely to be covered by the Dutch scheme and the Dutch as also threatening legal action against Iceland.
According to the FSA, they will contact you. Log into your account now and print off the amount you had in there. Don't wait as they may shut the website down without warning. Print a number of copies, in case any get lost in the post with your claim.
A nice simple page from the FSA is listed here:
I tried to open an account with IceSave back in March. My intention was to open a savings account first as it had a higher interest rate than the ING (at the time of opening). Once the savings account was opened I could then easily open an ISA for the 2006-2007 year. The ING account I had opened a few years earlier was very simple. IceSave, a different story.
The application went ahead ok and the paperwork arrived in the post. Everything seemed to be operating just fine (the paperwork took a little longer to arrive). Once all the paperwork was done and my payment had gone in (£250 minimum to open an account and get interest from them) I set about logging into my online account before transferring any more money into them.
It wouldn't let me log in and stated I was locked out of my account. I wasn't sure why. I emailed them and got a response to say I have to phone them. Good job I wasn't a deaf person. Phoning only helps if someone answers.
Since it was only £250 and I didn't need it yet, I continued to ignore the problem and use ING instead. I would write to IceSave to cancel the account and return my money and interest.
Before writing (in about June time) I decided that I would try logging in one more time to see if the system would let me. It did. I was into my account! Except, it said I had no accounts with them.
I emailed to ask where my account was and they replied saying it is a mistake and it would be corrected within a few days when their system updated.
So it took a long time to get an account open. I hope I never have problems with them again, because I would just close the account.
They also lost the ISA that I was going to open with them.
They lost the full amount of money I was going to put in there - money I may need to access remains in my ING account.
I have held an internet ISA with icesave for over a year and I am very impressed with how they have built up their business. At the time they were offering the best interest rate on an online instant access isa. i think this has now been taken over by the sainsburys internet isa but you still get over 6% annual interest and it guarantees to beat the bank of england base rate by at least 0.25% until 2011. having just received my yearly interest on my account, it definitely helping me beat this credir crunch!
and icesave now has over 1 million savers and is getting popular all the time. its also a very simple setup process. you fill in your details online, then send of confirmation of identity documents, then you recieve your account details and setup an existing bank account to which you can transfer funds from. when you want to withdraw money you have to allow 7 days for it to be put back into your bank account or can pay £50 to have it transferred the next day, so as long as you plan reasonably well ahead, there is no need to ever pay an 'admin' charge to transfer your savings so that you can spend them
Icesave - I have been trying to open a basic cash ISA with Icesave since 2nd. February this year before the April 5th deadline. Despite completing the relevant on-line form and subsequently numerous reminder emails to them and despite their automated responses - NOTHING.Poor communications and a very, very poor service, in my honest opinion.Imagine trying to get a response from them after successfully opening an account!!!!
With the amount of competition in todays market it is increasingly hard to keep track of where to put your hard earned cash.
In the last few years many foreign banks have been trying to get into the UK market. Dutch bank ING brought us a straightforward simple to use account then Indian bank ICICI offered better rates and now Icelands Landsbanki have their Icesave account.
These banks seem to be vying with each other at the moment and interest rates are constantly changing. I would check a website such as moneysavingexpert (see my earlier review) or check the individual sites of the banks for up to date info.
From 13 July 2007 the rate for Icesave (min deposit £250) is 6.20%
What makes this account stand out is their guarantee that the interest paid on balances over £250 is guaranteed to exceed the Bank of England Base Rate by at least 0.25% until 1 October 2009 and thereafter not to be lower than the Bank of England Base Rate until 1 October 2011. This should give at least some peice of mind.
You may of course get a better rates through savings accounts which are linked to your current account but this ties you to one provider and rates tend to drop after the initial offer. What Icesave offer is a straight forward stand alone account.
The website is easy to use with the usual security questions and password and then you can transfer your money to and from nominated accounts.
I have been using this account for several months without problem though one drawback is that they do not accept cheques, just electronic transfers. Presumably to keep down costs.
I would certainly reccomend this account particularly for the guaranteed rate.