Oct. 12--What has happened to Icesave?

Last Tuesday, Landsbanki, Iceland's second-biggest bank and owner of online savings brand Icesave, was nationalised. While the government in Reykjavik declared that all Icelandic savers" cash was safe, no such guarantees were given to more than 200,000 UK savers who have a combined £4 billion on deposit. This is despite Icesave being signed up to the Icelandic savings compensation scheme which, in theory, means UK savers should be able to recoup the first £16,000 of their savings under the "passporting" rules. At present, Icesave customers cannot access their cash.

QUESTION: I have savings with Icesave. So have I lost my money?

ANSWER: No. Chancellor Alistair Darling has said that if the Icelandic compensation scheme is unable to pay out, UK savers will not lose any cash. The Financial Services Compensation Scheme will step in to cover depositors in full, even beyond the £50,000 cap.

Q: Will I have to apply to Iceland to get back my money?

A: The UK Government and FSCS are working with the Icelandic compensation scheme to finalise precise arrangements, but it seems likely that claims will go through the FSCS and savers will receive letters in the coming weeks.

They will have to provide account details, including the amount of their Icelandic savings. Further information is available on fscs.org.uk or by phoning 0845 730 0131.

Q: How long will it take to get back my money?

A: This is unclear. Under EU law, financial compensation schemes should repay savers within three months of a company being declared in default. But a retail bank failure on the scale of Icesave is unprecedented and with the Icelandic economy on its knees, the FSCS cannot say how soon savers will get back their money.

Q: The FSCS has said that hardship cases will be prioritised. Will interest be paid on my Icesave savings?

A: Interest is payable on deposits up until the day a company is declared in default. In the case of Icesave, this was last Wednesday (October 8).

Q: I have an Isa with Icesave. Will I lose the tax break?

A: Arrangements are being put in place to ensure that those with Icesave Isas do not lose the tax-free status. The details so far are unclear, but the Government did ensure that the tax-free status of Northern Rock Isas was preserved.

Q: I have savings with Landsbanki Guernsey. Is this money safe?

A: This bank has gone into administration. There is no deposit protection scheme in Guernsey and the Icelandic scheme has said it will not cover anyone outside Iceland. Savers are being told to wait for correspondence from the administrator about repayment of their cash, but it cannot say when or how much that might be. Updates will be posted on its website, landsbanki.co.gg.

Heritable, part of Landsbanki, was also put into administration last Tuesday. However, luckily for its UK savers, a deal was struck the followingday between its administrators, the UK Government and Dutchowned ING Direct for ING to buy Heritable's UK savings book.

It means ING Direct will take on 22,200 UK savings accounts and £538 million in deposits.

ING says it is working to ensure it is "business as normal" for Heritable customers. In the short term nothing will change for customers who should soon be able to access their accounts to make deposits and withdrawals as usual. However, it is likely that in time, Heritable savers will be migrated into savings products from ING Direct's range, which might not be as competitive.

While the ING bail-out is good news for Heritable's UK customers, savers must be aware that ING Direct operatesthe "passporting" system for compensation.