Return of Icesave Savings ?

[whisturx]

Has anyone managed to get their money back from Icesave yet? I have had the first email on 5th November from the FSCS telling me to wait for the next one to go online and withdraw my savings back to my nominated bank. But nothing since. I see from the Sunday papers that it has supposed to have started.

I have a saving in a 3 year bond that has 26 months to go and have been told it can be left in at 6.3 % paid in one lump sum at the end. What I can not find out is who is holding it and paying the interest. Can't be Icesave as they are in recievership ? Must be the FSCS. By the time Gordon has given us all a tax rebate,rescued the banks,spent ,spent spent I can't imagine there will be anything left in 26 months time !! So safest to take the lot and settle for 3 % I suppose ?

Ian

[spospe]

I am in the same position as you, had the original email, am waiting for the one that will give access, so as to allow me to withdraw the balance (at the moment my account is viewable on line, but not operable).

[CliveH]

My understanding is that your accounts were taken over by ING after the intervention by the UK Government to secure all the funds.

 

I will try to find out a bit more from our techies in the morning and post again.

 

 

[CliveH]

Your Icesave accounts are now with ING Direct.

 

There is a general helpline 08451 313234

 

Full compensation is due to be paid this month - (November) and you should have had an email explaining some of the specifics re your account(s) by the 7th November.

 

HOWEVER - it seems that this email has on a number of occasions been placed in peoples "Junk Mail" folder. So if you have not heard anything yet there is another help line for you to ring:-

 

0845 7300131

 

Hope this helps.

 

[whisturx]

Thanks for replies.

I rang the FSCS helpline and asked if I left my fixed rate account what Bank/Building society would be holding my money and was told the Newcastle Building Society and gave me a number to ring. On contacting them was told they were operating the Icesave helpline phone but nothing else !!

Must admit I think I will probably take the lot(£ 77k) and run and settle for monthly interest at 3 % odd. Every fixed rate has disappeared. This is why I cannot believe any bank would want to take on Icesave customers at 6-7% fixed interest for up to 3 years ,when the Bank of England base rate could be 2 % very soon !!

 

Ian

[spospe]

Got my email from the FSCS today, logged on to the Icesave website and was able to move all money (from a, no notice savings account) to my nominated bank by BACS.

 

They are quoting 5 working days for the transfer and I will post again when I get the money.

[whisturx]

Thanks for letting me know. Still waiting for my second email.

Have opened a Birmingham Midshires E- saver account at 5.83% gross ready to transfer Icesave funds to from my nominated bank account when it arrives. General idea is to then move it in to their Annual Fixed Bond at 5.46 % before that disappears !! It always takes a week to open a new account with all the money laundering checks etc. so much easier to transfer from current to fixed rate within the same bank. Need to be sorted before the 4th December as rumour has it the Bank rate may drop another 1 %

In Nationwide today looking at their rates which are changing downward every few days. They could not guarantee the same rates next week !!

 

[spospe]

We have had all our Icesave money, plus interest, credited to our nominated account today.

 

As far as we are concerned the matter is now closed.

 

We have been quite impressed by the speed of resolution of this issue and the ease with which the FSCS seems to have sorted it out.

 

Michael

[CliveH]

Good to hear that Michael!

 

May I tactfully suggest that placing ones hard earned dosh in banks of a country with a population the size of a small city like Bristol was far more risky than perhaps you first thought.

 

Also there were plenty of warning signs back in Feb this year

 

http://www.thisismoney.co.uk/ask-an-expert/savings/article.html?in_page_id=111&in_article_id=430852&in_start_at=11

 

Frankly as an IFA who knew that Icelandic Banks were at significant risk simply by reading the Financial Press - I am staggered that individuals/people/charities and institutions were all happy to carry on investing.

 

I can only put it down to idiot websites like Fool and Moneywise who were still advocating Icesave/K Edge etc. right up until the end!

 

And of course they can do this because they are not regulated advisers and take a nice slice of advertising revenue.

 

Very pleased that you got your money back - However I am not so pleased that my firm will have to pay far more into the FSCS (the scheme is funded by providers and IFA's out of turnover) in future years because of this debacle.

 

It is galling to have letters on file thanking me for flagging up the issue and saying that some of my clients who had such accounts (none recommended by me) managed to get out in time and at the same time be told that yet more costs will be incurred by way of an increased contribution to the FSCS when I had nothing whatsoever to do with it.

 

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=174122&d=pnd2&h=pndh2&f=pndf2

 

Ok so it may not be to 2011 that we have to stump up the cash but even so - is it fair? No of course not - but when has that ever meant fair play?

[spospe]

"May I tactfully suggest that placing ones hard earned dosh in banks of a country with a population the size of a small city like Bristol was far more risky than perhaps you first thought."

 

CliveH, you are quite right, it was more risky and I am only too pleased to have been thrown a lifebelt.

[whisturx]

When taking out a fixed rate bond in December 07,I made sure I did not exceed the £35k per person which was covered partly by the Icelandic banking system and the bulk by the FSCS. I have an email reply from Icesave confirming my joint account guarantee of £70 k so felt protected.

In Feb/March I read about the rumours ,but with a three year fixed rate bond there was no exit possibility.

I am sorry the FSCS rescue will effect your premiums in 2011 but I suppose if H.M.Government had not baled out Northern Rock etc. your premiums would have been even worse.

I also had funds in Bradford & Bingley !!(Thank you Santander )

I am still waiting for my second email.

 

[spospe]

Ian

 

If you still have not had your second email, then perhaps it has been trapped by your SPAM filter?

 

Have you tried to directly access your Icesave account and see if you are being offered the option to withdraw your money?

 

I expected that the second email would contain some sort of code which would allow withdrawal, but all it was, was notification that my account was in fact ready. On this basis, when your account is ready for withdrawal, all you need do is access it and take out the cash, you do not actually need to have seen the second email.

 

Michael

[whisturx]

Michael

Thanks for the advice. I have set FSCS email address as a contact in my addresses as someone advised. Tried a minute ago on Icesave but no joy,instructed to wait for the second email.

I note from trawling around building Societies etc. that they are all dropping their rates again this weekend rather than waiting for the Bank of Englands next drop on the 4th December ! I think I am going to miss the boat !

One bit of luck,the Nationwide have allowed me to reinvest a bond that comes out on the 17th December at todays rate(not fantastic) but they drop 1 - 1.5 % next week.

 

[CliveH]

Thanks for the feedback - i am very interested from a professional viewpoint how individuals select deposit based investments as this is one area where investors basically can do what they want and Caveat Emptor applies as no formal advice is given.

 

Often when I ask individuals how they selected a deposit based account the response is usually "from a web search" or what we here classify as "G&T advice" - i.e. - Someone at the bar mentioned it. There is even a TV add from the Chelsea Building Society that factors in on this.

 

I suppose the point I am hammering home is that IFA's had the Icelandic Banking situation flagged up to them earlier in the year. OK so I obviously have a vested interest in repeating this but perhaps not a lot of people realise that when an IFA makes a recommendation they have to research the Financial Strength of the organisation and put their findings on paper.

 

The Equitable Life Debacle is a classic example. The true financial strength of this organisation was far lower than their publicised figures if you took into account their liability for the Guaranteed Annuities they had on their books. Due to smoke and mirror accounting they managed to hide this fact from the regulator, but questions were being asked across the Financial World and as a consequence Independent Advisers stopped using them. So of course Equitable made more of its ploy of cutting out the middle man and employed a highly paid salesforce to promote its policies and who, under the rules, as tied agents to that one company did not have to explain to people just how financially weak Equitable was.

 

But in a staggering bit of devious marketing Equitable marketed its plans via IFA’s through a subsidiary company “Permanent Life”. When it all hit the fan, Permanent was sold off to Liverpool Victoria. But all the while Equitables adverts professed to cut out the middle man, their own Annual Report and Accounts clearly showed the income stream from Permanent.

 

As I have said earlier – under the FSA ruling – all IFA must offer a fee based service or commission or a mixture of both. And to be fair I do not mind which way we get paid! - But I do believe commission is best for individuals as unlike a Firm or Company, Individuals cannot offset an IFA’s fee against tax. So where we are retained by a Firm, the VAT charged and our Fee itself is treated as a trading expense and can be offset against tax. But not so for individuals.

 

So if my fee was £100, then an individual would have to pay £117.50 via the Fee route. Contrast this to a Higher Rate taxpayer taking advice from us on their pension on which they can get tax relief on the contributions. If I took a £100 commission then no VAT is chargeable, PLUS! To put £100 into a pension scheme so that it can be turned round and paid out to the Adviser as a commission only costs the individual £60 if they are a Higher Rate Tax payer or £80 if they are a Basic rate Tax payer.

 

So, not surprisingly, when individuals have this explained to them, they tend to find the commission route more advantageous than the fee paying route. As we charge an hourly rate or a fixed fee, there is no difference to us whichever way a client chooses, so the old chestnut of IFA always selecting the plan that pays them the most is not relevant.

 

As for where to place your money now with rates dropping and they have a fair way down to go yet! - We have been placing a fair amount with Irish banks that have confirmed that the 100% Guarantee issued by the Irish Government will run for 2 years and that all investors are protected.

 

Currently Anglo Irish Bank are offering 12 month Bond at 6.8% via a Life Wrapper. Very attractive. It is an offshore account and so we have to do a fair bit of explaining re the tax implications, but in summary even if you took the maximum tax hit possible (you would not of course unless you were really silly!) at that rate of return you would still significantly better off than a UK account that is taxed anyway.

 

Even more so if you or your spouse is not using all of the allowances.

 

PM me if anyone wants more info.

 

[whisturx]

Many thanks for the tip on Anglo Irish. I have not looked recently but when the 100 % return was first offered I seem to recall the internet "money" sites saying that there was such a scrabble to deposit funds in Ireland that they could foresee another Iceland situation arising where the Irish would not be able to honour the vast amounts invested.

With reference to the FSCS I note they are still covering ICICI up to £50k even though every "money" site has caution stamped all over them. Even I bottled out on that one !!

My brother who works in Africa and can not have a UK bank account has lost 70% of his deposit in Lansdbanki Guernsey,so touching wood I consider myself lucky.

I suppose I have had a bad experience with an Allied Dunbar financial advisor(not independent ) who sold my father a Whole of Life Policy in 1990. Having put in £2,700 per annum every year,he passed on in April this year.I had made him check years ago that it would be OUT of inheritance tax. Now the Revenue are claiming the premium he paid over the last 7 years is treated as part of his annual gift allowance and querying whether the £100k payout is free of IHT !!! My solicitor is contesting.

Many thanks for your advice.

[CliveH]

Why was the Whole of Life plan not written in Trust? There would be no argument then.

 

The only reason for a Whole of Life plan is to pay out a sum on death. If it was not written in trust then the sum assured will be added to your Dads estate on his death. If the sum assured was not written in Trust then I suggest you complain to Allied Dunbar - now Zurich.

 

I do not understand the relevance of his annual Gift Allowance? It should not matter how the premiums were paid. Unless they are saying that the "income" used was in fact return of capital via the 5% allowance with an Investment Bond" ???

 

I may be shooting off at a tangent but Allied Crowbar (as they were affectionately known) used to promote a "Back to back" arrangement where an investment sum was placed in an Investment bond that provided the 5% "income", part of which was used to pay the annual premiums in a Whole of Life policy that was designed to pay the capital back to the beneficiaries on your death. These plans do work well, but the Whole of Life plan need to be written in trust. If not then as I say, it is my understanding that the sum assured on death will form part of the estate. If you or your Dad were led to believe that this was an IHT mitigation plan (and why else would anyone take out what is a fairly expensive and sophisticated plan?) and the Sum assured was not written in trust then it seems like a mis-selling case to me.

 

If it is one of the Back to back arrangements then this 5% "income" is actually classified as return of the original capital sum it could be classified by the revenue as not being a "normal out of income" payment and therefore is a gift. But I do not see how this would make a difference to how the sum assured on the WoL policy is treated? It is either part of the estate if it was not written in trust or outside of the estate if the appropriate Trust was used.

 

A little intrigued by this!

 

 

 

[whisturx]

It was in Trust and father had it confirmed. Definitely sold as an IHT exemption to help pay Inheritance Tax. He paid out £48,600 in premiums which paid out £100k which if £40 k went in tax would have a huge waste of time !!

The solicitor will sort it I believe or we take it up with Zurich as mis-selling.

Thanks for your advice.

Just received my second email from Icesave and completed the transfer out. Relief !!

 

[Brian Kirby]

CliveH - 2008-11-25 11:57 PM Good to hear that Michael! May I tactfully suggest that placing ones hard earned dosh in banks of a country with a population the size of a small city like Bristol was far more risky than perhaps you first thought..............

CliveH - 2008-11-26 12:18 PM Thanks for the feedback - ........................... As for where to place your money now with rates dropping and they have a fair way down to go yet! - We have been placing a fair amount with Irish banks that have confirmed that the 100% Guarantee issued by the Irish Government will run for 2 years and that all investors are protected. Currently Anglo Irish Bank are offering 12 month Bond at 6.8% via a Life Wrapper. Very attractive. It is an offshore account and so we have to do a fair bit of explaining re the tax implications, but in summary even if you took the maximum tax hit possible (you would not of course unless you were really silly!) at that rate of return you would still significantly better off than a UK account that is taxed anyway. Even more so if you or your spouse is not using all of the allowances. PM me if anyone wants more info.

Clive, sorry to cut your posts around, but reading them puts a question in my mind.  The implication of your first post above is that Iceland's banking system had grown too large to be underwritten by its small population, so that any guarantee provided by its government lacked credibility.  Recent events seem to bear this out. 

However, is not the same true for Ireland, which has a population of only some 6 million, less than that of Greater London?  How does one know what level of debt, especially toxic debt, the Irish banks carry, and whether the Irish government could, in the event, make good its guarantee for those sums?  No one seems to have been regulating ABSs, CDSs or CDOs at all, because they were regarded as "over the counter transactions", so the regulators, even if they have been looking, are at present unlikely to know the true state their bank's assets.  Under these circumstances, can Irish government guarantees really be relied upon?

[CliveH]

I would say so Brian - yes, because Ireland is a Financial Powerhouse with its Dublin Financial Centre, plus the fact that it is a full member of the EU and so we as EU citizens benefit from that. I do not think that we in the UK fully appreciate the financial security we can enjoy when dealing with another EU country. You may be surprised to know that you have more investor protection when dealing with an EU country like Ireland or Luxembourg than you do dealing with Jersey Guernsey or the IoM. That is because they are UK Dependent States, not full members of the EU

 

Iceland is not even that – it is just - well! - Iceland!!!

 

Population 304,000 - as I say about the same as Bristol. Or as it has unfairly been described as 300,000 alcoholics clinging to some Ice sitting on top of a Volcano.

 

You could say the same about Switzerland of course (not sure about the Volcano tho’) as that is not part of the EU. But somewhat in a different league and has a certain reputation Iceland never had nor is ever likely to have now.

 

And of course no one is saying even now what they were saying about Icelandic banks back in Feb this year – before it all hit the fan:-

 

Namely:-

 

“Furthermore, research from investment bank Morgan Stanley reveals Kaupthing Edge's borrowing costs have increased 400% in the past year, leading analysts to conclude that the bank is 7.5 times more likely to default than any other European bank.”

 

But as I say – what interests me is how and why some people ignored all the warning signs that were clearly there.

 

Perhaps a Ruskins quote is relevant here tho’ it does not quite fit when dealing with a deposit account that is offering perhaps a deal that is too good to be true? For “Better” substitute “Safer” and it works well

 

"It's unwise to pay too much, but it's

worse to pay too little. When you pay

too much, you lose a little money -

that's all. When you pay too little, you

sometimes lose everything, because

the thing you bought was incapable of

doing the thing it was bought to do.

The common law of business balance

prohibits paying a little and getting a

lot - it can't be done. If you deal with

the lowest bidder, it is well to add

something for the risk you run, and if

you do that you will have enough to

pay for something better."

 

John Ruskin

 

[Brian Kirby]

Sorry if I'm being slow, Clive, but does that mean that if the worst happened, and the Irish banks turned out to have such large debts the Irish government could not meet its guarantees, the European Central bank would step into its shoes?

I ask, because there does not appear, on the surface, to be that degree of commonality between the Eurozone banks.  For instance, a couple of years back we had a French bank account, held in Euros.  However, despite the common (Euro) currency we could not write cheques in any other Eurozone country, because the clearing systems were not equipped (at least at that time) to handle such clearances.  That suggests to me that, even within the Eurozone, an individual country's banks, being subject to its jurisdiction and regulation, are regarded as its problem, and so may not form part of the mutually supported banking system your comment seems to imply. 

If they do, I truly cannot understand why we are still faffing around outside the Euro, since the UK government simply doesn't have the assets to back the full extent of the risks we now, potentially, face.

[CliveH]

Yes Brian - there certainly is a risk that any bank anywhere in the world - not just the EU could go under. But just as our Government has propped up the banks in the UK, the French government has helped to prop up Dexia - a Belgium French bank that offers offshore centre facilities via Luxembourg. The French bailed it out due to it financing most of the French Local Governments. (Interestingly I heard the other day that the French rules forbid any Local Government from placing taxpayers money outside of the EU – perhaps we should have followed that example.)

 

http://www.guardian.co.uk/business/2008/sep/30/europeanbanks.belgium

 

But the point is the gearing. Icelandic banks were so highly geared they were like a vast Penny-Farthing bicycle – unwieldy, difficult to manage and as soon as they hit the brakes the rider was catapulted off. So the issue is the underlying Financial Strength of the bank in question – A good example would be Northern Rock that had a very high gearing (because it went for the sub-prime market) compared to say Nationwide. Similarly Bradford and Bingly where highly geared as well as specialising in the Buy to let market.

 

In contrast other banks in the EU share a common currency and common goals. It is highly unlikely that the EU would let any EU country “fall over”. But what backing was there to Iceland? – Sweet fanny adams.

 

The point you make about cheques in Europe is a valid one. But do remember that banking standards are very different across the EU still – even tho some share a common currency. In France for example it is a serious criminal offence to write a cheque when there is no money or insufficient money in the account. In France a cheque is treated more like a Bankers Draft – (a bit of a simplistic analogy but I am sure you get the drift.

 

Here in the UK it is very different and if we do that the cheque either bounces and we get a small charge and nothing more, or our Bank honours the cheque and increases our overdraft (for a fee of course!). French Banks have figured out that UK cheques are not

 

Easiest way we find of using money abroad is to move money from our offshore investments (where they grow gross – no UK tax) into an offshore bank account that can provide you with a Debit card and/or Cheque Book in Euros.

 

As for our being in the Euro – I am not sure it is a good idea. We trade with many countries outside of the EU and when I look at countries like Italy and Spain that were locked into an exchange rate more suited to the currencies of France Germany and Holland – the more I support our staying out of the Euro.

 

God knows I am not supporting the Banks – I think they have acted appallingly. But the prospect of seeing a big player fall over is something nobody wants. As a consequence the Governments around the world will support them despite much of the problems being of their making. So Governments will be printing money and giving it to the banks. And all of our future buying power will be compromised and that is not attractive.

 

But worse still is a depression such as was seen in the 1930’s.

 

We should never be in this position – it is not of the average man in the streets making! But we are here never the less.

 

[spospe]

We may be getting off the subject a bit here, but I do think that if we were in the euro, our situation in GB PLC would be a bit easier than it is.

 

This would be especially true for those of us that like to travel around the eurozone in our 'vans.

 

Anyway, I am happy with the Icesave outcome, especially as I got interest (at a good rate) up to October.

[CliveH]

Yes - as I say Michael - I am pleased the FSCS worked and that investors money was protected. But I think Darling is correct to look at the FSCS and the regulation of banks (as he has now said he will do) that operate in the UK to make sure that the UK Taxpayer is not footing the bill for non-UK/nonEU banks being badly run.

 

Because make no mistake - the return of your savings is at some cost to all of the rest of us (i.e. the UK tax payer) with the biggest cost landing on the doormat of those of us in the Financial field via increased FSCS levies even though we never recommended Icelandic banks and in fact due to our in depth knowledge advised people not to!

 

And I say again I am pleased that the system worked for you. But we now have the situation with the Indian bank ICICI that now seems likely to pull out and honour only a small fraction of the investor protection that it signed up to in order to trade in the UK. The Icelandic bank Icesave did the same thing.

 

This leaves the UK FSCS to pick up the tab. And the FSCA has already had to increase borrowing from the taxpayer and has warned that levies (its primary source of funding) from its members will go up.

 

Not surprisingly therefore Darling is looking at exactly how much investor protection should be applied to nonUK/EU banks who operate in the UK.

 

The rumour is that Iceland was going to simply walk away and not honour the FSCS deal it had signed up to and that is why our Government was forced to use supposed Anti-Terrorist legislation to freeze the banks UK assets and transfer depositors assets to ING.

 

That is why, when there was all the warnings going off at the beginning of the year - I am staggered that some investors seemed to simply go for the highest rate and NOT take into account how secure or even where the provider was based. I would be interested to know exactly how you did decide to invest with an Icelandic bank?

 

I am not sure how true this is but we had an email going the rounds from another firms client where the chap professed to not knowing that "Icesave" was an Icelandic bank! What did he think it was? - A financial arm of the Frozen Food chain?

 

And how Local Governments, Charities etc could justify placing £millions without due diligence analysis is just beyond me. Because for organisations, the FSCS does not work at all - it is only for individual private investors.

 

Forgive me for seemingly being a bit harsh - but I am sure you can understand that I am feeling more than a little hard done by at the moment seeing as we never recommended an Icelandic Bank and in fact did our very best to get over to our clients the dangers. But now - when it has all gone pear shaped, investors who seemed to take no advice at all get all their money back and the Advisers who had no part in that process at all are going to pay for it.

 

It is a bit like you parking your caravan under a tree clearly marked "Dangerous" which then falls on your caravan. And "the regulator" saying that all the other caravanners and the Tree Surgeon who wrote the Danger sign have to pay for the repair of your caravan.

 

Hence my interest in how you made your decision because it does seem that two of the main financial websites, that are not regulated by the FSA and therefore do not subscribe to the FSCS were the main advocates of Icesave and K.Edge and in fact were promoting them and carrying their adverts right up until it all hit the fan!

 

If this is the case – then a lot of believe those that run these sites should be held accountable.

 

[spospe]

CliveH, I understand your feelings and for what it is worth, I sympathise with you.

 

My reason for choosing Icesave was simply that I read a recommendation in the Sunday Times Money section.

 

Michael

[CliveH]

Thank you for that Michael

 

My professional association will find it useful that it was an unregulated source (a Journalist) that effectively recommended Icesave. They are collating as much info as possible on this.

 

As you can imagine we are all a bit hacked off at the prospect of having to pay for others mistakes (not yours - you were taking advice from a respected source) - our gripe is that the financial Pundits that write articles in the press do so with no regulation, no regulatory costs and no comeback when it all goes wrong.