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 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
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Recruitment Genius: Experienced Financial Advisers and Paraplanners

    Negotiable: Recruitment Genius: This extremely successful and well-established...

    Guru Careers: FX Trader / Risk Manager

    Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

    Day In a Page

    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
    10 best sun creams for body

    10 best sun creams for body

    Make sure you’re protected from head to toe in the heatwave
    Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

    Nick Bollettieri's Wimbledon files

    Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
    Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

    There is more than a shiny trophy to be won by England’s World Cup women

    The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map