Hardship continues for depositors of National Guardian: Sue Fieldman reports on the plight of elderly investors who have lost their life savings through the collapse of a Surrey bank

A growing number of depositors with National Guardian Mortgage, a bank in Hindhead, Surrey, which collapsed and was put into administration in March 1992, are experiencing grave financial hardship.

Many are elderly and were dependent on the regular monthly income from their bank deposits. John White, a spokesman for the depositors, said: 'Several have invested their life savings. One person is in an old people's home. Now there is no money coming in they cannot pay the home's charges. Other people are having to live on just a state pension. It is an appalling situation.'

Pam Joines and her husband Patrick had pounds 50,000 with National Guardian. They did not require income but invested the money for a fixed term of one year.

Mrs Joines said: 'The money was everything we had ever worked for. We heard about the collapse three days before my husband was due to have a triple by- pass operation.

'We are now having to live on a small pension. The shock of it all has meant that I have not been able to work since. We worked hard for a nice retirement, and suddenly our whole world has crashed around us'.

There is about pounds 1.5m in cash at National Guardian. The administrators, Ernst & Young, have been paid pounds 150,000 in fees up to June. The administrators' lawyers, Clifford Chance, have also run up a legal bill of about pounds 30,000. Several of the bank's directors and the staff are also being paid.

However, the depositors have received nothing from the bank.

Meanwhile, five months after the collapse, Ernst & Young was unable to confirm the exact reasons for the failure, or what action, if any, it would be taking against the directors or other officials of the bank. These matters were still 'under investigation'.

It added that further inquiries were also needed before a decision could be made on whether to contact the Fraud Squad, the Director of Public Prosecutions or other regulator.

In May 1992, the Independent reported that a team of accountants appointed by the Bank of England was at National Guardian at least a month before the collapse. In the weeks between the inspection and the collapse, existing depositors, including Mr White, were re-investing maturing deposits. Ernst & Young would not comment on the Bank of England's regulatory role.

Meanwhile, depositors awaiting the return of their money will have to be extremely patient. A spokesman for Ernst & Young said: 'As administrators we are not empowered to make payments to creditors. It has to be done through a liquidator or through a voluntary arrangement.

'I hope that they should get something before next March. But in no way will they get all their money back unless for some miraculous reason the property market upturns. We are looking at probably 40p in the pound, and with a fair wind perhaps 50p.'

Meanwhile, some depositors, including Mr and Mrs Joines, are starting to receive their compensation payments from the Deposit Protection Board. When a bank collapses, compensation of 75 per cent of the first pounds 20,000 is available. However, for many investors who were receiving income, the rules of the scheme mean the earliest they will receive any reimbursement is next March. Their financial outlook remains grim.