18th December 2014
Taxpayers and financial services firms are better off today thanks to a £1.36bn recovery achieved by the Financial Services Compensation Scheme (FSCS). FSCS has been working hard with the UK government to get money back from the estate of Landsbanki (LBI) for the failure of Icesave in 2008. The news comes after a payment to FSCS and UK government.
The money will offset the costs of the bank failures borne by UK banks, building societies and credit unions. It will help to pay back part of the loan FSCS received from the UK government to protect savers when Icesave failed. The Economic Secretary to the Treasury, Andrea Leadsom, made working on the recovery a personal priority.
In total, FSCS paid out £4.5bn in compensation to hundreds of thousands of UK consumers who lost money when Icesave went bust. The government funded the costs which should have been covered by the Icelandic scheme and loaned FSCS the money to pay consumers back their money. The recovery by FSCS will help to pay back the Treasury loans. It will reduce the bill to UK firms which have been paying off the loans with interest since the banking crisis. The total recovery now amounts to 85% of the payout.
Mark Neale, FSCS Chief Executive, says: "Working closely with the government we have been pursuing these recoveries with the authorities in Iceland. Today, UK taxpayers and deposit takers are getting back well over a billion pounds from the estate of Landsbanki (LBI). It is another significant milestone for us following the bank failures. And it's good news for firms and taxpayers. The recovery shows the significant financial benefit of our recoveries work; it demonstrates our commitment to recovering money from the estates of firms that go bust."
Since 2001, FSCS has protected more than 4.5m people while paying out more than £26bn in compensation.