The Chancellor has today agreed to guarantee 100% of savings for UK Icesave customers. Yes, that’s not just £50,000 that’s the whole amount. He said that the Icelandic compensation scheme had no money to meet its obligations and that he would step in and protect depositors.
This is fantastic news for all those with their retirement savings stuck in Icesave right now.
Darling said that he “wouldn’t normally do this” for the subsidiary of an overseas bank. It really is every nation for itself at the moment.
“The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here,” said Mr Darling.
“Because this is a branch of a foreign bank the first call would be on the Icelandic compensation scheme which, as far as I can see, hasn’t got any money in it.
BBC, 8 October 2008
It seems to me that offering a guarantee without sufficient backing is tantamount to fraud and we should now be asking all guarantee schemes to tell us precisely what reserves they have. Primer Minister Gordon Brown said the UK would take legal action against Iceland over its failure to guarantee compensation.