The 230,000 Icesave customers who lost out in the 8 October collapse of Landsbanki should receive compensation by 30 November.
The Financial Services Compensation Scheme (FSCS) is putting in place a system that means retail depositors of the bank should be able to receive their savings through an electronic payment into their linked accounts.
All Icesave customers had to nominate a 'linked' bank account and all withdrawals were automatically transferred to this account.
The FSCS will write to Icesave depositors by Monday 3 November to detail how the process will work. It will then contact customers again with instructions on how to complete a short electronic process to finish the transfer.
Loretta Minghella, chief executive of the FSCS says: "We have been working hard to establish a way of compensating retail depositors of Icesave without the need for a paper-based application process. The automated payment process is expected to be in place in ten days' time and the first payments are scheduled to start in the second week of November. We expect to offer compensation to the vast majority of retail depositors in November."
The Treasury has said that every UK customer will get back their savings in full and Icesave's individual savings account (Isa) customers have been told that they will not lose the tax-free status of their savings.
The FSCS has already stepped in to help more than 2.7m UK customers as a result of the recent problems at Bradford and Bingley, Heritable and Kaupthing Singer and Friedlander. It is now processing compensation applications from customers of Heritable and Kaupthing Singer and Friedlander whose accounts were not transferred to ING Direct.
Meanwhile, many offshore banking customers still face losing their life's savings following the collapse of Landsbanki Guernsey and Kaupthing Singer & Friedlander Isle of Man.
Guernsey has no depositors' compensation scheme so the Landsbanki customers face losing everything bar the preliminary payout from administrators of 30 per cent of their deposits. The Landsbanki Guernsey Depositors Action Group, operating at www.iwantmymoneylandsbanki.com is a useful resource for affected depositors.
The Isle of Man is covered by its own depositors' compensation scheme under which savers who had accounts with Kaupthing on the Isle of Man will be entitled to £50,000 of compensation per individual. In the case of joint accounts, each of the named account holders will be entitled to individual protection worth £50,000, which means that the total money potentially claimable would be £100,000. However, many customers deposited greater amounts with the bank.
Negotiations are under way to recover Kaupthing assets and enable a full payout of deposits, but the outcome is uncertain. The Kaupthing Isle of Man Depositors Action Group can be reached at www.ksfiomdepositors.org.
