Pensioner loses everything in Icelandic crash

MPs have heard a West Yorkshire pensioner has been left with "absolutely nothing" after losing her savings in the Icelandic banking meltdown.

A Commons debate heard that Katy Watt, 60, has been left without a home and is reliant on the state pension.

Wakefield Labour MP Mary Creagh urged ministers to help her and an estimated 2,000 others who had savings in Icelandic banks on the Isle of Man.

She told how Ms Watt was required to open an Isle of Man bank account after moving there five years ago. When she decided to retire to Wakefield this summer she put all her life savings, including the proceeds of her house sale, into a Kaupthing Singer & Friedlander Isle of Man account.

In October, amid rumours of collapse in the banking system, Miss Watt decided to move the six figure amount into her UK-based account.

Ms Creagh told the Commons: "She contacted the bank again and was told the money had left her account. It never arrived in her UK account.

"Her money is lost in the clearing system. Many other people who sought to move their money out have lost these funds in transit."

Ms Watt is now staying with friends and family.

The Manx government has a compensation scheme which covers deposits of up to 50,000.

However, unlike the UK's compensation scheme, there is no money "in the pot", Ms Creagh said.

Treasury minister Ian Pearson said he would ask civil servants to meet her to discuss the situation. But he stressed that the British Government's obligation must be to depositors with UK banks.

He said: "I sympathise with her constituents. KSF Isle of Man is a matter for the Isle of Man authorities and, as she will be aware, PricewaterhouseCoopers has been appointed as the provisional liquidator."

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