Consumers who have an ISA with Icesave have until Monday to lodge a claim for compensation with the Financial Services Compensation Scheme (FSCS) or risk losing the tax-free status of their savings.
The FSCS has set a deadline of 5 October for claims relating to ISAs so it can process and pass on compensation claims to Iceland. The Icelandic bank overseeing Icesave claims must receive all claims by 30 October.
Icesave went bust on 8 October 2008. Since then 296,600 savers have made successful claims, even though the FSCS only covers domestic banks that are authorised by the Financial Services Authority, and does not cover Icelandic banks. In Icesave’s case, the FSCS stepped in after the Icelandic government failed to compensate all of the bank’s UK customers.
Savings, including ISAs, held in Icelandic banks are protected up to just under £17,000, under the Icelandic Depositors’ & Investors’ Guarantee Fund. The remainder is covered by the FSCS.
A further deadline, of 15 October, has been set for deposits held outside of an ISA wrapper.
The Financial Services Compensation Scheme
The FSCS covers the first £50,000 of savings that a person has with an individually authorised bank. Many well-known bank brands are authorised on a group level rather than a brand level meaning customers may only be covered for the first £50,000 of any savings across all of the banking groups’ brands. For instance, if a consumer had £40,000 in a Co-op account, and another £40,000 in a Smile account and the parent group went bust, they would only be able to claim back £50,000 in total.
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