Icesave have frozen my cash! (Icesave)

Member Name: jo1976

Product:	Icesave
Date:	09/10/08 (216 review reads)
Rating:

Advantages: The UK government have promised that no UK savers will lose any money

Disadvantages: They have gone bust and taken my money with them!

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!

Summary: I would have been better off keeping my cash under the mattress!