Northern Rock Savings Guarantee Set To End
11 February 2010 / by Rebecca Sargent
The 100 per cent savings safety net put in place by the Government for savers at Northern Rock following its collapse in 2007 looks set to end.
According to Martin Lewis, creator of MoneySavingExpert.com, the taxpayer-owned bank has confirmed that it is likely to drop its 100 per cent savings guarantee, as it was never supposed to be permanent.
Commenting, Mr Lewis said: “There is no panic here, though if the 100 per cent guarantee disappears, this is something Northern Rock savers should be aware of, just as savers in any bank should fully understand the safety of their cash.”
Adding, “The real protection savers have, even without the full guarantee, is that it would be ludicrous for the Government to flog this bank to a company that would allow it to go bust. If it did, it would call into question our entire method of Government.”
However, Mr Lewis suggests that if the guarantee does disappear, it may be worth Northern Rock savings account customers shopping around, to make sure they are still getting the best deal for their money.
Commenting, Andrew Hagger of Moneynet.co.uk said: “Some savers will have sacrificed better rates available elsewhere in return for being able to keep their entire cash balance in one 100 per cent secure account.
“There’s no doubt that building societies suffered in trying to compete against the 100 per cent savings guarantee with many savers still concerned for the safety of their cash following the IceSave debacle in 2008.
“Hopefully the lifting of the Northern Rock guarantee will enable them to compete fair and square and result in an inflow of retail savings balances again before too long.”
© Fair Investment Company Ltd