Northern Rock savers will lose the Government's 100 per cent guarantee on their deposits on 24 May, the Government said last week, and the guarantee will not apply to accounts opened between now and 24 May.
The guarantee was put in place in 2007 to stop a run on the struggling bank. But this led to accusations of unfairness from building societies, which saw a flood of deposits move to Northern Rock as savers fled to what they now saw as a safe haven.
The removal of the guarantee was welcomed by the societies. "It helps return the savings market to normality and we will be able to compete more fairly now," said Fiona Cornes of the Building Societies Association. Savings with Northern Rock will revert to the same £50,000 guarantee offered on savings with all UK banks and building societies under the Financial Services Compensation Scheme.
National Savings & Investments will be the only institution offering a 100 per cent guarantee on savings.Reuse content