How will the compensation process work?
Icesave savers will have their savings refunded via an automated process. The FSCS will begin sending emails to affected customers over the next few days.
Account holders will receive two emails. The first will outline the process which will see customers refunded through an electronic payment made into the nominated account that is linked to their Icesave account.
The second email will give instructions for depositors to verify their claim – they will need to log on to their existing accounts and complete a short electronic form which will enable them to verify their process.
The FSCS said it will start making compensation payments next week. The process is being phased to manage volumes but the FSCS aims to refund most customers by the end of November.
Is there anything I need to do?
If you are an Icesave account holder you don’t need to do anything. However, if you have not received your first email from the FSCS by the close of play on Friday, you should let them know. There is a dedicated customer service team to deal with Icesave enquiries, the phone number of which is 0845 7300 131.
Please note, the FSCS will only contact you twice by email. Because of the amount of money held in Icesave accounts, customers could be targeted by fraudsters, so be on your guard. If you receive any additional emails or phone calls enquiring about your account details it will not be a genuine request from the FSCS.
I don’t know what I should do with my money when it is refunded
Billions of pounds will be refunded to Icesave customers in the coming weeks and many will unsurprisingly be nervous about where to reinvest it.
Kevin Mountford, head of banking at moneysupermarket.com, said: “Having had their fingers burned once, many savers will be understandably nervous about where they reinvest their money. Although the Government stepped in and guaranteed all deposits held in Icesave accounts so no customer loses money, anyone reinvesting their savings should take note of the protection given under the terms of the FSCS – only the first £50,000 with any single institution is totally guaranteed, so if you have more savings than that, make sure you spread it around between different providers.
"Also, bear in mind that interest rates are expected to fall further over the coming months, so it makes sense to shop around and ensure you get a good return on your money."
There are still a number of easy access accounts paying more than 6.0%. Egg’s Savings Account (internet) has a rate of 6.55%, although this includes a 1.80% bonus. Tesco Personal Finance is also offering an internet account, the rate on which is 6.50%. Again the rate includes a 12-month bonus, in this case, 1.50 percentage points.
If you want greater access flexibility, Scarborough building society’s easy access account, which is a phone and postal account, is paying 6.50%. Capital One’s Bonus Saver (issue 3) is also paying 6.50%, although it includes a 12-month bonus of 1 percentage point, and this is available online, over the phone or by post.
Other providers offering rates in excess of 6.0% include Natwest, The AA, Birmingham Midshires (although it’s worth noting that both The AA and Birmingham Midshires are part of the Halifax Bank of Scotland group so savers who have accounts with both still only get £50,000 of protection under the FSCS), Anglo Irish Bank and Alliance & Leicester.
For more information about how the FSCS works and advice on how to spread your savings to ensure your money is totally protected, read our articles How to keep your savings safe, Who owns who? and How safe is your bank? And for more details of the leading savings rates, visit our comparison tool.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.