£4.5bn paid to Icesave customers

IcesaveMore than £4.5 billion in compensation has been paid to nearly 230,000 UK Icesave customers in the five years since the Icelandic bank became one of the biggest casualties of the financial crisis, the savings safety net has said.

The Financial Services Compensation Scheme (FSCS) said that on average, the 228,516 customers it has paid out received £15,215.53, with payments ranging from more than £2 million to just 1p.

The vast majority of Icesave customers were compensated by an online process within a couple of months after the internet bank failed on October 8 2008 and its parent company Landsbanki collapsed.

A relatively small number of people who did not complete the process by the 30 December 2008 deadline were sent paper application forms and the final payment to an Icesave customer was made in May 2012.

Some 14,273 payments were made for more than £50,000 and there were also 36,687 payments of less than £1,000.

Mark Neale, chief executive of FSCS, which compensates people when their bank or building society goes bust, said: "For many people, the collapse of Icesave was the moment at which the credit crunch became very real. The experience of Icesave customers proves that when people needed help, FSCS was there.

"However our research continues to show a lack of understanding and knowledge about the protection we provide.

"We want to reassure the vast majority of people that their money and savings are safe, and warn those who unwittingly put their money at risk."

Icesave savers were compensated following an agreement involving the Icelandic and UK governments and the FSCS to ensure that people were not left out of pocket.

Since Icesave's failure the general protection rules for UK authorised banks, building societies and credit unions have been improved and simplified.

Savers are protected up to £85,000 if their provider goes under, rather than the previous limit of £50,000 and the vast majority of people now get their money back within seven days.
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