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Northern Rock savers warned as 100% guarantee ends

Northern Rock savers warned as 100% guarantee ends

Category: Savings

Updated: 24/05/2010
First Published: 24/05/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Savers with Northern Rock have been warned that the unlimited guarantee on their deposits with the state-owned bank comes to an end today.

The 100% guarantee was put in place by the Government in 2007 as a temporary measure after Northern Rock endured the first run on a bank in more than a hundred years.

However, following a restructure of the bank and an upturn in its fortunes, the Government has decided that the additional guarantee is no longer required.

As a result, Northern Rock customers with existing variable rate savings accounts, and all new savings accounts, have now seen their cover reduced to the same level available to savers with other UK banks and building societies under the Financial Services Compensation Scheme (FSCS): up to £50,000 per person.

Existing fixed term account holders with Northern Rock are to retain the full Government savings guarantee for the remaining term of the product.

"This is a positive step in our return to normal business, and ensures that we compete on the same terms as other banks and building societies," the bank said in a statement.

According to Moneyfacts.co.uk, Northern Rock has been improving the competitiveness of its savings accounts and mortgage deals during the past few months.

With the Government fearing a state-backed bank with an unlimited guarantee on its deposits would give it an unfair advantage over other banks and building societies, restrictions had been imposed as to exactly how competitive Northern Rock's lending and savings products could be.

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