Although most savers have now been compensated for their losses, thousands of others remain out of pocket, having invested their cash in offshore subsidiaries of the failed banks. The UK's pledge to reimburse people's losses hasn't covered anyone saving offshore, causing anger among those who've lost out.
If you were embroiled in the Icesave crisis, then you have just one more week to claim compensation from the Financial Services Compensation Scheme (FSCS) - it needs to receive claims by 15 October.
More information on claiming your money can be found on the FSCS website.
What happened?
UK savers were affected by the collapse of two Icelandic banks; Landsbanki - offering online savings accounts under the brand Icesave, and Kaupthing - with accounts under the name Kaupthing Edge.
These banks went into receivership and the Icelandic financial authority froze their assets, causing a wave of panic among UK citizens who suddenly lost access to their cash.
ING Direct, the UK arm of the Dutch bank ING, bought out the Kaupthing accounts, securing the savings of those customers.
However, it wasn't clear whether Icesave customers would lose some of their money - or which government would be responsible for their losses.
Were they compensated?
Under its own financial regulations, the Icelandic Depositors' and Investors' Guarantee Fund was responsible for the first £16,872.99 in compensation for every saver, while the UK's scheme pledged to top up the remainder until everyone had been refunded up to £50,000.
However, the UK government then made the decision to guarantee savers' funds - and not just the first £50,000, but the entire amount.
Was everyone compensated?
Unfortunately, this compensation did not protect everyone. There are still many savers fighting to receive compensation for their losses and that's because they invested in offshore subsidiaries of the failed Icelandic banks - notably those based in UK crown dependencies.
So, people had placed their savings in Landsbanki Guernsey and Kaupthing, Singer and Friedlander (KSF) Isle of Man. These are not covered under the FSCS because they are not held on the UK mainland and there has been limited cover or none at all from the islands' authorities.
This has left thousands of savers heavily out of pocket - with many losing their life savings.
Losses
Many of those affected say they didn't know an Icelandic institution had bought their accounts. For example some savers paid their money into the Guernsey branch of the Cheshire Building Society, which was later taken over by Landsbanki.
Kevin Mountford, head of banking at moneysupermarket.com, expressed his sympathy for those involved.
He said: "It is interesting to note that some offshore savers were actually pointed towards these products via their onshore banking or building society relationships and now these organisations appear to have washed their hands of the situation.
"The myth is that these are ex-pat wealthy individuals and yet in reality many are ordinary people who have aimed to better their futures by saving their hard earned cash."
Yorkshire-based Susan Soar sold her business and paid the money into a one-year fixed rate bond with the Derbyshire Building Society Isle of Man, so she knew the money would be held offshore.
However, she claims the Derbyshire took the funds four days after agreeing to sell the accounts to the Icelandic bank KSF Isle of Man but did not tell her.
By the time Susan realised who owned the account, it was too late to access the money because of the terms of the bond. She's now struggling to meet a capital gains tax bill, and has been forced to try and sell her home.
Another UK saver, former community nurse Dawn Richardson, sold her home following a divorce, paid off her debts and placed the remaining money with KSF Isle of Man.
Once she lost access to her capital, she was left surviving on benefits, even sleeping in her car at one point, along with her teenage daughter. She told moneysupermarket.com: "What hurts is I have worked on the frontline with sick people all my nursing career and when I needed help I did not get it."
Action
Many of the savers who missed out on compensation have formed and joined action groups, trying to put pressure on the government and island authorities to offer them the same support that was given to other UK account holders.
In fact, a protest is being held today (Friday) outside Derbyshire Building Society's headquarters, where depositors plan to release balloons carrying the words: "The Derbyshire sold us out to an Icelandic Bank".
What now?
If there's one silver lining to this cloud, it's that UK savers have become far more clued up on keeping their money protected.
Prior to the Northern Rock and Icelandic bank dramas, many people were unaware that the country had a Financial Services Compensation Scheme, let alone the extent to which they could expect to be covered.
Now that it's widely understood that the first £50,000 is protected - or £100,000 for a joint account - many people have wised up and split their savings to ensure all their money is safe.
However, it's not generally known that the protection applies per institution rather than account. Since some institutions own more than one brand - for example Abbey and Bradford & Bingley are both part of Santander - a saver with £50,000 held with each would only receive half their money back.
Read our article 'Who owns who' to discover which brands belong to which companies. There's also advice on protecting your money in our article 'How to keep your savings safe'.
You can also read other people's stories and share your own experiences in our forum. There's a discussion of the Icesave situation, KSF Isle of Man and Landsbanki Guernsey.
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