County council taxpayers’ cash would have been safer in a building society than Icelandic banks, according to the boss of Kent Reliance.

Mike Lazenby, chief executive of Kent Reliance Building Society, based in Chatham, said that instead of investing around £50 million in those banks which have since collapsed, Kent County Council could have got a good rate by saving with the county’s only building society.

Around 50 local authorities, NHS trusts, universities and other public sector bodies saved with the society, but KCC had "never invested a penny piece."

"It’s disappointing that they should be putting so much in one country," he said. "For a slightly lower return, but with a much reduced risk, they would have been better advised to stick it in a building society."

By investing in Iceland, KCC had taken "too great a risk." He added: "They’ve never even rung us up for a quote. They’ve never called us and I don’t know why."

Deputy chief executive Rob Procter added: "It does seem strange that our local councils aren’t supporting their local society and leaving the money where it’s completely and utterly safe but are going off to these headline-grabbing rates abroad which are just too good to be true."

But Nick Chard, KCC’s Cabinet member for finance, said the council had invested the money across 31 different financial institutions.

This had been done on the basis of advice from Treasury experts. "It wasn’t that we were simply chasing the best possible rate and taking risks," Cllr Chard said. "What we have got is a very clear strategy, a very clear protocol. It’s about minimising the risks by going to many banking institutions."

KCC had not invested in Kent Reliance, he said, because it was not on the "counter-party" list of approved institutions recommended by its advisers.