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Worried about Northern Rock?

The MoneySavingExpert has some advice on his website at the moment for anyone who may be worried about the Northern Rock situation. Despite all the assurances from the UK and Irish Financial Regulators and the respective governments, many people are still looking to withdraw their money from Northern Rock. If you’re one of those people who’s still worried, check out the advice here.

There are a couple of aspects to this that I find interesting:

  • There is much coverage of the fact that the savings of customers are protected by the UK Financial Services Compensation scheme – however, there hasn’t been much detail of what this involves – particularly because of the fact that the more you have, the greater the chance you won’t get all your money back.
  • If you have a savings account then the maximum level of compensation is £31,700. This is broken down so the first £2,000 is 100% protected. The next £33,000 worth of savings is 90% protected. Happily, if you have savings of £2,000 or less then you have absolutely nothing to worry about, even in the unlikely event of Northern Rock going bust. If you’ve deposited a lump sum of £20,000 then you would receive compensation of £18,200. You may not be able to recover all of your savings, but at least the vast majority is safeguarded. (From the Motley Fool).
  • The Financial Services Compensation Scheme can only help if the company concerned has actually gone out of business – at the moment, it’s no use to anyone.
  • Should this process be needed, it’s not quick. From this information booklet:
    • Q. How long will it take to process my claim?
      A. After a declaration of default, FSCS generally aims to process your claim within six months of receiving an application form.
      However, delays may be caused by factors outside our control or because the case is particularly complicated. If you are facing particular hardship, we will try to deal with your claim as a priority.
  • And finally, in breaking news, if all comes to all, the British Government have confirmed that they will guarantee 100% of the savings of Northern Rock depositors – according to CNN here.

I’ve been told by a couple of people that Northern Rock are being very slow to sort out their website which is inaccessible at the moment – saying that it appears broken on purpose – it doesn’t even let you try to log in. Apparently, no matter when you try to log in, you get this error – even at 4am in the morning.

An interesting way to prevent a “run” on the bank – particularly as if you’re an internet customer, you’ve probably signed up to T’s&C’s which mean you don’t get to visit a branch or call an actual person.

But of course, that’s all the “doomsday scenario”. What I would love to know now is where is all the Irish Northern Rock euros going to go now? Will people look at this event and think that they really only can trust Bank Of Ireland or Allied Irish Banks now? Despite the comparatively low interest rates they offer compared to Northern Rock or Anglo Irish Bank?

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