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Speaking to Channel 4 News, the MPA said it was "urging the government to guarantee local authorities and police authorities against any potential losses".

"Local authorities and police authorities are obliged to invest responsibly and deposit money in a wide range of banks and other financial institutions, after independent advice and within strict guidelines, to make sure that any risk is spread and there is no impact on the taxpayer."

"The MPA is by statute constituted as a local authority and as part of the GLA family, the Association of Police Authorities (APA) and the Local Government Association (LGA) will be urging the government to guarantee local authorities and police authorities against any potential losses."

"The MPA fully supports the LGA's call to the government to extend to local authorities and police authorities, who have prudently managed council tax payers' money, the same assurances as given to the public that money invested in accordance with the law, and the government's own guidance, will be fully protected."

According to Channel 4 News, the Sussex Police Authority also has deposits of £6.8m invested in Icelandic banks.

This is alongside Kent, Dorset, Cornwall county councils and Transport for London which also have millions of pounds stored in various Icelandic banks.