Around 10,000 London Scottish Bank savers have been promised 100% of their money back even on balances over £50,000 after the Manchester-based bank was placed in administration.
The Financial Services Authority placed London Scottish Bank in administration on 30 November and prevented from accepting anymore deposits from customers. The Financial Services Compensation Scheme (FSCS) has now been appointed to refund savers with up to £50,000 with London Scottish Bank, with the Treasury pledging to refund any deposits over that amount.
The FSCS says it is now putting arrangements in place to pay back customers but it is still not certain when refunds will be made. Savers will be contacted with details of how they can apply for compensation.
Loretta Minghella, chief executive of the FSCS, says: "We know that customers of the firm will be concerned about the safety of their deposits. We have put plans in place to help customers of London Scottish Bank and are ready to act.
“As soon as we have access to customer contact details, we will write to depositors individually and provide more information on timescales. FSCS will do everything it can to get people their money back quickly."
London Scottish Bank offered saving accounts, right-to-buy loans and mortgages. Just a few months ago, the FSCS and the Treasury were forced to step in and rescue savers after the collapse of several Icelandic-owned banks and the nationalisation of Bradford & Bingley.