Savers and investors are feeling understandably nervous about where to park their cash after depositors' money in Icesave was frozen. Here are the protection rules in full.

Savings

If a bank or building society fails, the Financial Services Compensation Scheme (FSCS) protects savers' money up to a limit of £50,000. (The FSCS is funded by a levy on the banks).

The protection is “per person per bank”, which means that if you have a joint account you could receive up to £70,000 under the current rules (£100,000 from Tuesday).

Since the run on Northern Rock, savers have been advised to split deposits of more than £50,000 between different institutions. But take note that the compensation is £50,000 per “banking licence”, not for each account or brand. Some savings providers that are owned by the same parent bank have their own banking licences, while others share that licence .

For example, if you have money with Abbey, cahoot or Bradford & Bingley - all owned by Santander and registered under Abbey National - your total compensation limit would be £35,000. However, Alliance & Leicester, which is also being taken over by Santander, will retain its separate banking licence. Therefore, you could have £50,000 in Abbey and Alliance & Leicester - £100,000 in total - and the entire amount would be protected.

If you are unsure whether different banks have the same licence, contact the Financial Services Authority (FSA) on 0845 6061234, or visit www.fsa.gov.uk. There is also a full list here.

Overseas banks

UK subsidiaries of foreign banks registered with the FSA are covered by the FSCS. ICICI Bank, of India, and the Nigerian-owned FirstSave fall into this category. However, some European banks, such as Icesave and ING Direct, have compensation schemes that are partly funded by their home country and topped up by the FSCS. Savers would have to apply to the foreign scheme first, which could delay your compensation.

The great news if you have savings in an Irish-owned bank or building society is that you have a cast-iron guarantee that you will receive all your money, no matter how much you have deposited. In an attempt to restore confidence, the Irish Governments said on Tuesday that it would guarantee savings without limit for the next two years.

The unprecedented safeguard applies to UK savers with Post Office accounts, which are provided by the Bank of Ireland, and to other Irish banks operating in the UK, including Anglo Irish Bank and Allied Irish Bank. Offshore accounts in the Isle of Man and Channel Islands fall outside the FSCS safety net altogether.

Insurance

If an insurer goes bust, the amount of protection depends on the products that a customer holds. Nick Dear, of More Than, the insurer, says: “Claims made under insurance policies required by law, such as third-party motor insurance, are fully covered, while claims under non-compulsory insurance, such as home contents, have the first £2,000 covered, plus 90 per cent of the remainder.”

You may also qualify for a partial refund of premiums.

Investments

Regular investment funds, such as unit trusts and open-ended investment companies (Oeics), are ring-fenced, so if the fund manager goes bust, the fund loses money but yours is protected. If this safeguard failed, the maximum you could claim is £48,000 per person, comprising 100 per cent of the first £30,000 and 90 per cent of the next £20,000.

Long-term products sold by life insurers - guaranteed income bonds, endowment plans and most pensions - receive 100 per cent of the first £2,000 and 90 per cent of the rest.

Some so-called protected funds that claimed to guarantee all money, even if the stock market fell, were hit by the collapse of Lehman Brothers. The US bank provided securities for these funds, even though they were issued by investment companies, such as Arc, NDFA and Meteor. Investors are not covered by the FSCS.

The best government-backed returns

Savers with Irish-owned banks are fully covered, regardless of how large their deposits. Some of these are offering good rates, particularly Anglo Irish, which has a one-year fixed-rate bond at 7.05 per cent and a seven-day notice account at 6.55 per cent.

The Post Office, the savings products of which are provided by the Bank of Ireland, has a cash Isa paying 6.25 per cent, dropping to 5 per cent after a year. Its popular branch-based Instant Saver account offers 5.75 per cent, including a 12-month introductory bonus of 1.5 per cent.

Accounts with Northern Rock and National Savings & Investments (NS&I) also come with a 100 per cent guarantee. They do not offer the most competitive deals - as part of the nationalisation agreement, Northern Rock cannot offer market-leading rates, but its one, three and five-year fixed-rate cash Isa pays 6 per cent. Experts say that it is worth moving quickly if you want to benefit as Northern Rock could soon have to close its doors to new customers after a rush of deposits into the bank.

NS&I's index-linked savings certificates are also attractive, paying the rate of inflation, currently 4.8 per cent, plus 1 per cent.

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