Cable quizzes Darling on Iceland

1.47.50pm GMT Sat 1st Nov 2008

• [Oct 30]: Vincent Cable (Deputy Party Leader; Twickenham, Liberal Democrat): The Chancellor knows about the enormous anxiety in charities and local government about the billions lost in Icelandic banks, and the thousands of British savers whose savings disappeared because they were routed through Kaupthing Isle of Man.

Now that he has confirmed that he was informed of the difficulties of Icelandic banks months ago, will he place in the House of Commons Library a full record of the information that the Treasury was given over the past year, and the action that it took on the back of it to protect British savers' interests?

Alistair Darling (Chancellor of the Exchequer, HM Treasury; Edinburgh South West, Labour): As the hon. Gentleman knows, the Financial Services Authority, which is the regulator of banks, building societies and other financial institutions, monitors what is happening in institutions all the time. That is its job. It is not surprising that, from time to time, the FSA may have concerns about institutions. It speaks to those institutions, and it gets them to try to address those concerns.

As for the Icelandic banks, the fundamental problem was not here but in Iceland. As the hon. Gentleman knows, Iceland has effectively had to take over its banks. I have been trying to persuade the Icelandic authorities to ensure that they honour their obligations to savers in this country under their compensation scheme, and also that they treat creditors in this country fairly and on the same footing as Icelandic creditors. I have had a number of discussions with the Icelandic Prime Minister and Foreign Minister, but so far we have not been given those assurances, which is why I have had to step in to guarantee retail depositors and savers in this country. That is where our obligation lies. I will continue to do whatever is necessary to protect people who find themselves in that position, but what we really must do is encourage the Icelandic Government to conclude their discussions with the International Monetary Fund. Some of those discussions will, I hope, ensure that British creditors-indeed, all creditors outside Iceland-are treated fairly, and in the same way as those living in Iceland.