Savers with Northern Rock will lose their 100 per cent government protection on their money from today.
The measure was put into place in 2007 to stop savers withdrawing their cash from the bank after it was on the verge of collapse and was forced to take an emergency loan from the Bank of England.
The crisis came after the bank introduced mortgage products which lent borrowers as much as 125 per cent of the value of their home.
The 100 per cent guarantee stopped the run and reassured savers but it will now be replaced for the standard guarantee on all savers deposits covered by the Financial Services Authority.
But from now on savings are only protected to the tune of £50,000, bringing the bank into line with its competitors.
Although customers with a fixed rate bond will continue to be fully covered until their investment matures.
A spokesman for Northern Rock said: “The removal of the guarantee is another positive step for Northern Rock and reflects our strong capital and funding position. We are returning to a level playing field.”
Comparison website Moneyfacts has shown that Northern Rock has become much more competitive for savers since the beginning of 2010.
The bank is now offering 5 per cent on a new regular saver account and it is also in the best-buy tables for fixed-rate bonds.
Michelle Slade, of Moneyfacts, said: “Northern Rock appears to be trying to attract new business to maintain its savings book because it is worried that customers might switch to more competitive deals when the guarantee is lifted.”
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