Hi

I have my cash ISA with Icesave and had requested a transfer to a Nat West ISA about 2 weeks prior to the freeze on accounts - the problem I have now is that Nat West have now opened an ISA for me with a zero balance. Whats the implications of that - will I be able to request that my Icesave funds are paid into it once unfrozen?

Also, I have a stock & shares ISA with another provider and wondered if they are also protected by the government compensation scheme if the bank I hold it with goes under?

Does anyone know if the compensation for Icesave will include loss of interest? I'm assuming that if we have been promised that we wont lose a penny that it should?

Cheers

I doubt that you'll get any interest for the period after liquidation if the cash ISA funds are still with Icesave but, if the amount was less than £50k, you should get all the rest. There is a time limit for paying out of 3 months but I am unsure how that will apply because the UK scheme will only look at the funds that are left after the Icelandic scheme has paid out, but you should get the money within 3 months of the UK compensation scheme being applied. You should certainly try to keep the money under an ISA wrapped but this will probably not happen automatically so you should be prepared to keep all correspondence and make a few phone calls when the time comes.

Most stocks and shares products are protected by different legislation. If the ISA provider goes bust, the stocks and shares, or at least their value, will still belong to you.

I've just checked the fscs.org.uk web site and it seems that they pay interest at LIBOR less 2% less tax for the period that they are involved. How the tax deduction would apply to your ISA is something that you should watch. If applied, it would only be for the period after liquidation and it would be something to query.

The period within which compensation is paid is recommended by EU advice to be 3 months. However the fscs web site states that they try to process all claims within 6 months.

Thanks for the replies - interesting (particually about the FSCS and the payment of interest)

So I should expect to get back my capital, plus interest, from April (until the default date in October) from Icesave and then interest (paid at the current Libour rate less 2%) from the default date until the repayment date from the FSCS?

Hopefully the liquidator will confirm that that is the case. If not, you should certainly question things.

Of course, you should not count on anything until you get the cheque(s). It is conceivably possible that the liquidator will say that the funds went into the bank clearing system before Icesave went into liquidation. In this case, you will have to make phone calls, write letters and so on to track the money down. There's nothing wrong with contacting Nat West at this stage to see if they can give any further information. You also need to watch the Icesave web site for news although I doubt that you will be able to contact anyone there until the liquidator has been appointed.