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
Sunday 03 February 2008
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.
Consumers given power to choose a green deal
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Buyers beware of new-build home headaches
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
- 1 Why I'm on the brink of burning my Israeli passport
- 2 Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
- 3 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
- 4 Iraq crisis: How Saudi Arabia helped Isis take over the north of the country
- 5 Barack Obama fist bumps Texas restaurant employee in support of gay rights
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
Emergency data law: David Cameron plots to bring back snoopers’ charter
NUT strike: David Cameron announces crackdown on strike action ahead of mass industrial action
- < Previous
- Next >
iJobs Money & Business
£30000 - £45000 Per Annum: Clearwater People Solutions Ltd: Our client based i...
£650 - £750 per day: Orgtel: Senior Analyst Developer (KDB/QKx plus Java and F...
£55000 - £60000 per annum + bonus + bens: Deerfoot IT Resources Limited: Our c...
£40000 - £45000 per annum + bonus + bens: Deerfoot IT Resources Limited: Messa...
Day In a Page
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square