Banking on the Edge

Posted on 15 October 2008 in Money (No comments yet - be the first!)

The recent collapse of Icesave resulted in me pondering the future of my bank accounts.

The situation which saw Icesave customers in Britain were just left without their money, with no real word of what was actually happening, meant I thought I'd be better with my cash in a bank that was fully registered, regulated and protected in Britain. Because, after all, when the bank uses the so-called "passport scheme" and is only partially protected in the UK, you end up being at the behest of another country's government who don't exactly have foreign citizens as their number one priority.

I felt happy therefore that my second account with Kaupthing Edge, was run by a UK authorised and registered bank (Kaupthing Singer & Friedlander). Then the UK government put it into administration, and prompty sold off Kaupthing Edge UK to ING Direct. Who are registered in the Netherlands´┐Ż

So much for that plan. (That said, the Dutch scheme offers a higher level of compensation than the UK scheme - up to £77,000.)

Not having a particularly large amount of money in Kaupthing Edge, I've rather just left it there. It's still one of the best savings account interest rates, and ING Direct have clearly got other problems to deal with like missing payments and sorting out systems before slashing interest rates repeatedly. In fact if you hunt round the Kaupthing Edge website, account application pages are still functional as is the ability to move money to a fixed term bond at very nice rates. What actually happens if you try to open new accounts is another matter. One suspects a letter might arrive on the doormat saying "Err. Sorry. No."

I can't help but think that ING might not be too much in a rush to drop interest rates however. They've just got hold of all these customers in a turbulent bank market - are they going to be in a rush to get rid of them? Possibly not.

Either way, in such times, it's unlikely to be worth making plans until the cash is returned. That could be a few months away, and anything could happen in the meantime...

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