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; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

    They fled war in Syria...

    ...only to get stuck and sidetracked in Hungary
    From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

    Title sequences: From The Prisoner to Mad Men

    Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
    Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

    Giorgio Armani Beauty's foundations

    Sumptuous fabrics meet luscious cosmetics for this elegant look
    From stowaways to Operation Stack: Life in a transcontinental lorry cab

    Life from the inside of a trucker's cab

    From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
    Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

    Kelis interview

    The singer and sauce-maker on cooking for Pharrell
    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea