To ask the Chancellor of the Exchequer what role (a) the Financial Services Authority and (b) his Department has had in the transfer of depositors' money from Icelandic banks; what procedures have been followed; and what safeguards there are for depositors' money. (274690)

[holding answer 13 May 2009]: Heritable and Kaupthing Singer and Friedlander (KSF) are UK-based banking subsidiaries of the two Icelandic banks Landsbanki and Kaupthing. On 7 and 8 October 2008 respectively, the FSA concluded that Heritable and KSF no longer met their threshold conditions, and were in default for the purposes of the Financial Services Compensation Scheme (FSCS). The Treasury, using powers under the Banking (Special Provisions) Act 2008, transferred certain accounts of Heritable primarily used by retail depositors and KSF’s Edge retail deposit business to ING Direct. The Government also committed to paying out in full FSCS eligible depositors whose accounts were not transferred. The remainders of Heritage’s and KSF’s businesses were subsequently placed into administration following due legal process.

On 8 October, the FSA announced that the UK-based branch of Landsbanki was in default for the purposes of the Financial Services Compensation Scheme (FSCS). To maintain financial stability and protect retail depositors, the Chancellor announced that all retail depositors with the Icesave brand of the branch would receive their money in full.