The Dutch authorities have just raised their level of protection for deposits to 100,000 euros (£80,000) -- and this applies to UK savers -- so it is more generous than the FSCS.

But there is no guarantee that the Dutch compensation scheme would be able to cope with the failure of a bank the size of ING.

About 100 depositors with Heritable Bank have not had their accounts transferred to ING Direct. However, the UK government has given a guarantee that these savers will get back 100 per cent of their money. The FSCS will write to those affected this week.

This UK savings brand was launched by Iceland's largest bank, Kaupthing, last February. The Icelandic government was forced to seize control of the bank last week. But again, ING Direct bought the bank's UK savings book -- covering 160,000 customers and £2.5 billion of retail deposits.

As with Heritable Bank savers, ING Direct says it is working to ensure it is "business as normal" and is trying to clear the backlog of transactions by savers from last week. Kaupthing savers are likely to be moved into ING savings products at a later stage.

The compensation scheme used by ING is not as straightforward as that offered by Kaupthing Edge. Though Kaupthing was an Icelandowned bank, it offered UK savers the full £50,000 protection via the FSCS -- unlike Icesave. ING Direct savers will have to apply to the Dutch compensation scheme in the event of the bank's failure (see panel, right).

Kaupthing Edge savers with noninternet accounts -- about 3,000 -- have not been transferred to ING Direct. The Chancellor has given a guarantee that these savers will get back 100 per cent of their money. The FSCS will send a form to eligible customers this week.

For Paul Vidler, 20, an accounts clerk from West Ham, east London, and his girlfriend Emma Pragnell, 23, a physiotherapist, the situation remains worrying.

The couple have a combined £4,000 in fixed-rate bonds with Kaupthing Edge, which they hope to put towards a house deposit.

"It has been a worrying week," says Paul, "but I was relieved to hear that ING Direct had stepped in to buy the savings book.

"We should keep access to our cash, but for the past few days I have been unable to move money out and it's impossible to get through to anyone at the call centre.

"Once the situation calms down, Emma and I will look to switch our money elsewhere, even if we lose interest or have to pay a penalty. I'll probably put it into Premium Bonds." Irish banks.

The Irish government gives 100 per cent unlimited guarantee to all savings deposits run by

It is not clear how long this protection will remain, so UK savers should stay vigilant. Also, an " Iceland" situation cannot be ruled out. The Irish economy is in a mess and if any Irish bank failed, there is no guarantee that the Irish Government would be able to honour its pledge to UK savers.

The protection applies to UK savers with Anglo Irish Bank, Allied Irish Bank and Bank of Ireland. All Post Office accounts are run by Bank of Ireland.

The Dutch bank has attracted more than a million UK savers since its launch in 2003. It is owned by Amsterdam-based ING Group.

Last Wednesday, the bank, which has more than 21 million customers and £248 billion in customer retail deposits, agreed to buy the UK savings books of Kaupthing Edge and Landsbanki's Heritable Bank. Between them they have more than 180,000 UK savers.

ING Direct savers, including those previously with Kaupthing and Heritable, have their money protected up to £80,000, but ING Direct uses the "passporting" system of compensation (see panel, Page 65).

It means that though the protection is more generous than that offered by the FSCS, in the event that ING Direct fails, UK savers would have to apply to the Dutch scheme.