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Despite guarantees on their bank accounts, many readers have lost faith in Dublin and want their cash back in Britain
No amount of reassuring words from Irish banks and the Irish government about the economy in the past week has satisfied readers - many retired - that their money is safe in Irish bank accounts.
Dozens of people contacted us after an article in last week's Cash (Ireland looks to quash talk of crisis as savers get the jitters), asking us to find out if there is some way to retrieve their money.
Many opened accounts in Ireland on the promise of high interest rates but often, overwhelmingly, because they had the security of both the UK and Irish compensation schemes written into the terms and conditions of the account. Nothing in the terms suggested this situation might change.
But now they have only Irish protection. This is, in fact, better than the UK's Financial Services Compensation Scheme (FSCS), which protects savings up to £50,000, because the Irish government has guaranteed all money in Irish bank accounts until September 2010 and, even after that, up to €100,000 (£88,000) is guaranteed.
There is one exception. AIB Group (Allied Irish Banks) is a fully FSA authorised UK subsidiary, so AIB customers still have first call on the UK compensation scheme.
Even though the Irish scheme offers 100% protection, that holds good only as long as the Irish government can pay out if banks collapse. If it got to the point that the Irish government could not compensate depositors, UK savers could not now revert to the UK scheme because the Irish banks (importantly for UK savers, Bank of Ireland and Anglo Irish Bank) are not directly UK authorised.
The problem is that, despite this increased protection, many readers say that they have lost confidence in the Irish economy.
Shares in Ireland stand at a 14-year low and last weekend 100,000 people protested in Dublin about the government's economic recovery plan. Anglo Irish Bank has been nationalised following a loans controversy and last week fraud squad officers raided its headquarters. It has a London contact address but no UK subsidiary. UK depositors have almost €10bn in Anglo Irish and account for half the bank's savers.
Because of the uncertainty, some of them want to abandon the high interest rates they locked into and are even prepared to pay a penalty to withdraw their savings. But those with fixed-rate, fixed-term products have found they can't get out.
However, there appears to be hope. Some savers are having success in getting money out, so long as they have a good reason - which does not include being worried about the bank's future.
When reader Tony Tucker learned the terms had changed, he tried to get his money out of Anglo Irish but discovered that, although its FAQs told him withdrawals were allowed at a penalty and in an emergency, the terms and conditions added " ... and if permitted by us".
"The bank's reply said I had 'not provided a satisfactory reason for us to action this transfer'," he wrote in an email to Cash last week. "I am extremely worried by the present situation. This money is critical to my retirement and can never be replaced or earned again."
Tucker invested his retirement lump sum with Anglo Irish because the terms and conditions said the account was covered by the UK compensation scheme.
"I took my pension, for which I have saved all my life, in September 2008. I wanted to invest this securely to produce the best possible interest. Acting conservatively, I only considered using banks covered by the UK's FSCS. Of these, Anglo Irish offered the best rate," he says.
"Had the UK scheme not been mentioned, I can categorically say I would not have invested, because I did not regard the Irish guarantee on its own to be sufficient, given the size of that country and its economy in the prevailing financial conditions."
Tucker appealed to the bank, explaining that his son and daughter were likely to lose their jobs and he needed the money to support them. Last week, Anglo Irish agreed to refund his money without penalty "as a one-off goodwill exception".
The Observer has learned of other savers having similar success. However, the bank does say it will consider all withdrawal requests on a case-by-case basis, so there is no guarantee that persistence will pay off. The bank also insists customers are protected by nationalisation.
Thousands of Post Office savers, whose money is with Bank of Ireland, will find it easier to access their money. They are allowed to cash in their fixed-term bonds and are unlikely to pay what the Post Office calls a breakage charge, because interest rates have fallen so far. But this also means savers cannot earn nearly as much in a new account.
Many readers have asked whether they have a claim for mis-selling, as the compensation scheme with their bank is different to the one they signed up to.
Despite these problems, customers cannot claim they have been mis-sold these Irish savings accounts. If you opened an Irish bank account after seeing an advertisement or direct mailing, you were not sold the product and so cannot under any circumstances claim it was mis-sold.
You can claim mis-selling only if a financial adviser recommends you buy an unsuitable product. You can also complain if you were advised to buy a fixed-term bond and now believe you should not have your money tied up.
'Withdrawal only in emergency? Well, it is one'
I am a pensioner and have savings in an Anglo Irish Bank one-year fixed rate bond, due to mature in November. Anglo Irish Bank is still offering savings deals and the Irish government denies there is any likelihood of its reneging on its debts. But we are worried. Prior to an entity going bust, anybody can say anything to assuage the fears of savers in order to avoid a flood of withdrawals.
Mrs D, Essex
I have money in the Anglo Irish and the Post Office. Both have assured me I needn't worry. They would, wouldn't they? I was made redundant five years ago, bought my pension annuity last summer and receive the state pension next month. Anglo Irish suggests that a withdrawal will only be considered in an emergency - well, it is one.
HW, by email
We sold my 89-year-old mother's house and invested the money in banks that were familiar to her. I thought the Post Office growth bond would be rock solid. I am deeply concerned, as I feel responsible and it is to pay for her care.
SW, Suffolk
I have tried to help my 90-year-old mother invest the proceeds from the sale of her home in a Post Office account and a one-year bond with Anglo Irish Bank. Becoming nervous about Ireland's 'guarantee', we have withdrawn most of the former and will look for a safer investment.
DG, by email
We invested in an Anglo Irish one-year fixed interest bond in October 2007 and renewed it in 2008. We would never have renewed the bond had we been made aware of this serious change to its terms and conditions.
RS, Cumbria
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