Depositors in Kaupthing Singer & Friedlander Isle of Man (KSFIOM) were dealt a fresh blow yesterday when it emerged that they may have to wait until 2017 to recover millions of pounds lost when the bank collapsed last year and that they may have only 80 per cent of those funds returned.

The KSFIOM Depositors’ Action Group expressed its frustration at the delay yesterday, saying that more than 4,000 depositors and bondholders had been assured by the bank’s directors that their deposits were protected, right up to the collapse of the Icelandic bank.

This autumn, the savers received a maximum of £50,000 under the Isle of Man Depositors Compensation Scheme, but many fear that they will never see the rest of their money. Meanwhile, British depositors in Kaupthing Singer & Friedlander UK have already been reimbursed in full.

The collapse of the bank’s Manx subsidiary dates back to mid-2008, when the island’s regulator, the Financial Services Commission (FSC), expressed concern about the bank’s exposure to the struggling economy of Iceland, which prompted KFSIOM managers to transfer about £550 million, or 50 per cent of its assets, to Kaupthing UK, assuming that it would be safer there. Soon afterwards, Kaupthing UK was put into administration, and the Isle of Man funds were frozen. KSFIOM was placed in liquidation in May this year.

The bank’s creditors have called for a public inquiry over the transfer, which could have covered a large percentage of their losses when the Isle of Man bank went down.

It is determined to discover which regulator, the FSC or Britain’s Financial Services Authority, was responsible for the transfer of the funds to another vulnerable Icelandic bank for “safekeeping”.

Sarah Chantrey, spokeswoman for the KSFIOM Depositors’ Action Group, said: “The constant refusal by any associated party on the Isle of Man to take responsibility for the collapse is completely unacceptable.”

Last week, MPs in Westminster were asked to support an early day motion blaming KSFIOM’s collapse on the FSA’s move to revoke its deposit-taking licence in the wake of the fall of Kaupthing UK. The motion also attacks offshore life companies for their role in presenting KSFIOM as low-risk.

The group also expressed concern that savers were staying away from the island’s remaining institutions, with assets under management and administration falling by more than 40 per cent to $24 billion (£15 billion) at the end of June, from $59 billion in June 2008.

Diane Gallagher, a retired British depositor with the bank, had £550,000 in proceeds from the sale of her flat. She and her husband were planning to use the money to move to France. “We placed the proceeds from the sale in a KSFIOM account, on the advice of financial advisers, who assured us that it was a safe place to deposit our money, as it was covered by a 100 per cent parental guarantee and had an AAA rating with Standard & Poor’s,” she said.

PricewaterhouseCoopers, which is handling KSFIOM’s liquidation, was not available to comment.

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