The ice men can melt savers' hearts. But will their rates stay faithful?

Foreign providers have burnt British fingers before. The Viking invasion should be different, finds Kate Hughes

Forget cod, Bjork and the Vikings, the latest exports from Iceland to grace our shores are their marauding banks – armed, luckily, with some highly competitive savings products.

The most recent newcomer, Kaupthing Edge, landed here last week with an account offering 6.5 per cent interest, instant access and a guarantee to pay 0.3 per cent above the Bank of England base rate for the next five years.

The invaders come in peace – though UK rivals might argue – and their deals, frequently topping the "best buy" savings tables, do tend to be as competitive as they seem.

"These products really are good," says Lisa Taylor of comparison service Moneyfacts. "Along with the new entrant, Icesave's instant access savings account offers 6.3 per cent, is easy to understand and has few conditions. They do not have the same cost base as the big UK banks, which are finding it very difficult to compete."

HSBC, for example, comes close to the rates of Landsbanki, Kaupthing Edge and others, but only if consumers don't take any withdrawals.

What the ice men do next, however, is crucial. Consumers have been burnt before by foreign banks bearing gifts.

For example, the Dutch- owned ING Direct came to the UK offering a bumper instant access rate and attracting a huge inflow of cash deposits – only for rates to be allowed to wilt.

In the case of Kaupthing Edge, though, Kevin Mountford of comparison site Moneysupermarket.com is confident of the new entrant's staying power. "Customers wondering whether their cash will be safe and how rates will fare once Kaupthing has gained a foothold should be happy. Based on its track record in Europe, it should remain competitive.

"The Icelandic banks are entering the market with few products, so their pricing is clear and all the consumer has to do is monitor it."

It isn't just Europeans who are cashing in on our market. Indian bank ICICI, whose HiSave easy-access account offers 6.41 per cent, continues to top the savings charts, and Nigeria's FBN Bank is responsible for another easy-access product that matches the Kaupthing Edge offer.

But after stories of scandals in overseas call centres, consumers would be entitled to ask if money held with a foreign bank is safe.

On the surface, the answer has to be yes. Overseas-based providers are subject to the same Financial Services Authority regulations on deposit security, while their customers are protected by the Financial Services Compensation Scheme for 100 per cent of the first £35,000 worth of deposits, under the same rules as the domestic market. And almost every international bank has signed the British Banking Code, which is voluntary but sets out best practice for how banks treat their customers.

It is also worth remembering that the line is blurring between UK and overseas financial companies, with household names like Abbey owned by foreign institutions.

But if consumers are still uncertain about the safety of their money, Mr Mountford says they could spread the risk across a number of accounts, as they should in case of risk in any market.

Suggested Topics
PROMOTED VIDEO
Sport
Manchester United's kit for the 2014/15 season
football
News
Nadine Gordimer died peacefully at home yesterday
peopleNobel laureate was a powerful anti-Apartheid voice
Extras
indybest
Arts and Entertainment
Neil Young performs on stage at Hyde Park
musicAnd his Hyde Park set has rhyme and reason, writes Nick Hasted
News
Women have been desperate to possess dimples like Cheryl Cole's
people Cole has secretly married French boyfriend Jean-Bernard Fernandez-Versini after just three months.
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Extras
indybestThe tastiest creations for children’s parties this summer
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Programme Planner

    £30000 - £45000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

    HTS GBM - KDB Developer, Kx Q Query Language, £750

    £650 - £750 per day: Orgtel: Senior Analyst Developer (KDB/QKx plus Java and F...

    Infrastructure Test Lead

    £55000 - £60000 per annum + bonus + bens: Deerfoot IT Resources Limited: Our c...

    Messaging Support Consultant

    £40000 - £45000 per annum + bonus + bens: Deerfoot IT Resources Limited: Messa...

    Day In a Page

    Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

    Super Mario crushes the Messi dream

    Germany win the 2014 World Cup in Brazil
    Saharan remains may be evidence of the first race war, 13,000 years ago

    The first race war, 13,000 years ago?

    Saharan remains may be evidence of oldest large-scale armed conflict
    Scientists find early warning system for Alzheimer’s

    Scientists find early warning system for Alzheimer’s

    Researchers hope eye tests can spot ‘biomarkers’ of the disease
    Sex, controversy and schoolgirl schtick

    Meet Japan's AKB48

    Pop, sex and schoolgirl schtick make for controversial success
    In pictures: Breathtaking results of this weekend's 'supermoon'

    Weekend's 'supermoon' in pictures

    The moon appeared bigger and brighter at the weekend
    Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

    How Saudi Arabia helped Isis take over northern Iraq

    A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
    The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

    The evolution of Andy Serkis

    First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
    You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

    You thought 'Benefits Street' was controversial...

    Follow-up documentary 'Immigrant Street' has got locals worried
    Refugee children from Central America let down by Washington's high ideals

    Refugee children let down by Washington's high ideals

    Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
    Children's books are too white, says Laureate

    Children's books are too white, says Laureate

    Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
    Blackest is the new black: Scientists have developed a material so dark that you can't see it...

    Blackest is the new black

    Scientists have developed a material so dark that you can't see it...
    Matthew Barzun: America's diplomatic dude

    Matthew Barzun: America's diplomatic dude

    The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
    Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

    Meet the 'Quantified Selfers'

    From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
    Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Five-star reviews are just the opening act for British theatre's first non-white artistic director

    Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
    Mrs Brown and her boys: are they having a laugh?

    Mrs Brown and her boys: are they having a laugh?

    When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor