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

News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
PROMOTED VIDEO
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsA Welsh town has changed its name - and a prize if you can notice how
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
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 - Real Staffing

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

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Italian couples fake UK divorce scam on an ‘industrial scale’

    Welcome to Maidenhead, the divorce capital of... Italy

    A look at the the legal tourists who exploited our liberal dissolution rules
    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    The vintage series has often been criticised for racial stereotyping
    An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

    An app for the amorous

    Could Good2Go end disputes about sexual consent - without being a passion-killer?
    Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

    Llansanffraid is now Llansantffraid

    Welsh town changes its name, but can you spot the difference?
    Charlotte Riley: At the peak of her powers

    Charlotte Riley: At the peak of her powers

    After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
    She's having a laugh: Britain's female comedians have never had it so good

    She's having a laugh

    Britain's female comedians have never had it so good, says stand-up Natalie Haynes
    Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

    Let there be light

    Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
    Great British Bake Off, semi-final, review: Richard remains the baker to beat

    Tensions rise in Bake Off's pastry week

    Richard remains the baker to beat as Chetna begins to flake
    Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

    A look to the future

    It's time travel fashion at Louis Vuitton in Paris
    The 10 best bedspreads

    The 10 best bedspreads

    Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
    Arsenal vs Galatasaray: Five things we learnt from the Emirates

    Arsenal vs Galatasaray

    Five things we learnt from the Gunners' Champions League victory at the Emirates
    Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
    The magic of roundabouts

    Lords of the rings

    Just who are the Roundabout Appreciation Society?