Kaupthing: Thousands of savers still waiting to get their money back (KSF UK)

Posted 04/03/2009 - 17:22 by vikingvictim

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2009-03-04 (All day)

Kaupthing: Thousands of savers still waiting to get their money back
Almost 5,000 savers with Kaupthing Singer & Friedlander are still waiting to get their money back – five months after the Icelandic bank went into administration.

By Emma Simon
Last Updated: 12:21PM GMT 04 Mar 2009

The Financial Services Compensation Scheme (FSCS) has said that 2,200 Kaupthing Singer customers have so far reclaimed a total of £32m in their accounts, but many more are still waiting to access their money in closed accounts, which in many cases runs to tens of thousands of pounds.

The FSCS admitted that there had been delays in making these compensation payments. It said the delay was due to the way in which Kaupthing Singer stored its data, which has resulted in the FSCS having to manually check much of the information received from the bank administrators to ensure customers receive the correct compensation.

In total 7,000 customers had their money frozen in KS&F when the bank went into administration in October last year. Many savers with its online subsidiary Kaupthing Edge had their money transferred automatically to ING Direct, the Dutch bank. But those without an internet banking facility had to claim their money back from the FSCS.

Initially customers were told that the process should take around six weeks, and the FSCS hoped to compensate people by Christmas. Many KS&F customers have been angered at how long it has taken for them to get their money back. And many have criticised the FSCS for the "chronic lack of information" they have received.

Christopher Quinton and his wife, who run their own business in Oxfordshire, say they desperately need the money in their accounts to help fund their business, as in the current climate getting another tranche of funding from their bank is proving difficult.

Mr Quinton said: "We have the money in our accounts, but cannot access it. Without this money we are facing the reality of laying off staff. The Government says it wants to help small businesses in the current climate, but the actions of agencies like the FSCS do not seem to be helping."

He has written to his MP and asked the National Audit Office to investigate the handling of these claims by the FSCS.

He added: "Last week I staged a sit-in at the FSCS offices and was told my case would be dealt with as a priority. But I have yet to see a penny, and every time I contact the FSCS helpline they cannot give me any further information about the progress of my claim."

Mr Quinton said he was now planning further demonstrations until the matter was resolved.

He said there had been a paucity of information for affected savers. "The FSCS only updates its website once a month, and they still have no tracking system to monitor individual claims. Their helpdesks are polite but hopeless as they cannot tell you anything.

"Two weeks ago they stated again that they were still awaiting confirmation of balances from the administrators, Ernst & Young, although E&Y maintain that all balance confirmations have been passed on to the FSCS."

Matthew Franey, another KS&F saver still waiting for his money, was also highly critical about the information provided. He said: "Ernst & Young runs a supposed helpline for affected customers, but on the one occasion it has been answered they were not able to provide any information. The FSCS has people answering the phone but cannot give any details of when this money is likely to be repaid."

The delays have been in stark contrast to compensation payments made to those who had money trapped in Icesave, another defunct Icelandic bank. Icesave, owned by Landsbanki, went into administration at the same time.

The FSCS operated an "accelerated" claims process with Icesave, which saw funds transferred electronically into a customer's linked bank account. Icesave customers started receiving compensation at the beginning of November, with the majority of money refunded by Christmas.

A spokeswoman for the FSCS said it was unable to comment on individual cases and could not say when Mr and Mrs Quinton would receive their money.

She said: "The FSCS recognises that customers of Kaupthing Signer & Friedlander yet to receive compensation and who are involved in this claims process will be concerned about their compensation, and we would like to reassure them that our priority, as always, is to pay the compensation that is owed to them as quickly as possible. We are doing all we can to achieve this."

She added: "We are dependent on the bank's records for validating and processing claims and the data has been very complex to resolve. We have worked through a lot of the claims and we continue to work through the records, resolving any inconsistencies or gaps in the data as quickly as possible while ensuring that the decisions are made on accurate information."

The FSCS declined to comment on when all claims would be paid.