The problem was that my money was in a cash individual savings account (Isa) and transferring it could take up to a month. In Monday's post, I sent off the forms to transfer the money to Northern Rock.
Too late. On Tuesday Icesave's parent, Landsbanki, went into receivership. The Financial Services Authority expects that UK Icesave customers will have to claim compensation - the first €20,887 through the Icelandic compensation scheme and the rest, up to the new £50,000 limit, from the UK's Financial Services Compensation Scheme (FSCS).
If you are one of the 300,000 UK Icesave customers, who chose the bank for its best-buy interest rates, follow this column as I will be detailing my experiences of claiming the money back.
If the bank is declared in default, the FSCS tells me that it will send me a form to fill out. The FSCS says UK customers will not have to make two separate claims and that I will be able to apply to both compensation schemes on one form. It is working with the Icelandic authorities to confirm the procedure.
I have several worries:
First, can the Icelandic scheme afford to pay compensation? When I took out the account, I thought that any problems in getting compensation would be purely bureaucratic, as I would have to deal with two schemes. But my blood ran cold when I realised that as the Icelandic government picks up the pieces of its banking system, the money might not be there to pay out a saver's first €20,887.
Second, how quickly will I get the money? This particular pot is my family's emergency cash fund and I don't want a huge delay. The FSCS says it hopes to process all claims within six months. We shall see.
Thirdly, will my money keep its tax-free status as a cash Isa? If it doesn't, then I'll lose out on lots of interest over the years. "We don't have an answer to the tax-free issue," says Mark Oakes, head of communications for the FSCS. "Hopefully, the money will keep tax-free status, but we've got a lot of work to do."
I have to say that I didn't sleep much on Tuesday night. This experience will probably colour my attitude to risk for a great while.
