Julian Knight: The borrowers who've been sacrificed to salvage a bank

Who will stand up for the mortgage custo- mers of the newly nationalised Northern Rock? We have heard about the Treasury's need to claw back its huge loans, the shareholders' lost investment and the staff whose jobs will go, but what about the people who may now face a real fight to keep a roof over their heads?

The bank will wind down its mortgage business to release money faster to the Treasury. This process will be achieved by discouraging mortgage customers to stay with it through the blunt and potentially very damaging weapon of keeping their rates higher than average.

Northern Rock's standard variable rate is already a punishing 7.59 per cent, compared with a norm of around 6.8 per cent. Those who can afford to do so will grin and bear it, get to the end of their mortgage deal and go to a lender that actually wants them, but many other customers simply won't be able to manage. These people face arrears, a damaged credit record and even repossession. Bank of England rate cuts won't help them if the Rock doesn't pass them on.

Even worse, put yourself in the shoes of one of the bank's Together customers – those with a 125 per cent mortgage. With house prices falling, they are in negative equity, so they won't be able to remortgage away from the Rock as no other lender will touch them. They will just have to sit tight and hope the high rates don't bring them to their knees.

In the dash to give taxpayers their money back, it mustn't be forgotten that the Rock has a duty of care to its borrowers. The Financial Services Authority, which was dunce-like in its handling of the original Rock crisis, should remind the bank of its responsibility to treat customers fairly.

Energetic it isn't

Ofgem, the energy regulator, has announced it is going to investigate the gas and electricity market. This is only a few weeks after chief executive Alistair Buchanan brushed aside calls from consumer groups and this newspaper for just such an inquiry.

Now Ofgem says it has an open mind and that it will be looking at the market in-depth. This begs the question, what has it been doing these past three years while our bills have soared?

Consumer groups and charities tell me that Ofgem is far too close to the industry. Take its almost total inaction when energy firms held back on passing on cuts in the wholesale price of gas and electricity during most of 2007. The result of Ofgem sitting on its hands could be seen in Centrica's huge profit rise last week.

Now we face the long haul of an investigation which, even if Ofgem does find anything untoward, will only lead to another probe by the Competition Commission. If anything is ever done, we're looking at 2010 at the earliest. Perhaps it would have been better, given Ofgem's track record, if the market had been referred straight to the competition authority.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant Birmingham

    £18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Recruitment Consultant - Soho - IT, Pharma, Public Sector

    £20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week