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April 5, 2009

MPs recommend compensation for charities’ Icelandic losses

by Gill Montia

Story link: MPs recommend compensation for charities’ Icelandic losses

The Treasury Select Committee is recommending a Government bail-out of charities that have lost money deposited with Icelandic banks.

The global financial turmoil of October last year saw the collapse of Iceland’s Kaupthing and Landsbanki.

Individual savers with UK-based accounts have since been compensated by the Government, although Britons with money in offshore accounts have not been so fortunate.

MPs have now considered the case for reimbursing both charities and local authorities and have come out in favour of Government help for charities, saying their services are need more than ever “at a time when people are faced with difficult economic circumstances”.

However, the committee recommends that councils should be left to deal with their own estimated losses of £1 billion.

Last week, the Audit Commission named seven local authorities that had continued to invest in Icelandic banks, despite warnings from credit rating agency Fitch that the banks were in difficulties.

According to the report by the spending watchdog, the authorities placed a combined £33 million in Icelandic accounts when they should have known better.

 

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