Heritable Bank savers left in limbo

Kevin Mountford, head of savings at moneysupermarket.com commented: "Just when it look liked Icesave, which today closed for withdrawals, would be the first Icelandic casualty in the UK, Landsbanki's other UK brand Heritable Bank has gone into administration.

"Initially the administrators, Ernst & Young indicated that the UK Treasury would be standing behind all deposits and not just the £50,000 per person covered by the FSCS. However, it has now withdrawn that statement pending clarification from the Treasury in the morning. Whilst it seems inconceivable that the Chancellor won't guarantee all Heritable balances, after his statement yesterday, it leaves Heritable customers with large balances in limbo tonight.

"The pressure is now on the FSCS to work with the administrators Ernst & Young, the FSA and the Treasury to pay compensation extremely quickly. Our forums are already full of customers saying that they need access to funds quickly to pay bills. It is absolutely vital that the FSCS pays compensation within days if confidence in UK banks is not to plummet even further.

"It seems quite likely that Icesave will follow Heritable. The situation here for UK customers is more complex as they will need to claim both on the Icelandic compensation scheme and on the UK scheme. However, sensibly, the FSCS is working with the Icelandic authorities and it looks likely that savers will only need to complete one claim form."