Julian Knight: The borrowers who've been sacrificed to salvage a bank

Who will stand up for the mortgage custo- mers of the newly nationalised Northern Rock? We have heard about the Treasury's need to claw back its huge loans, the shareholders' lost investment and the staff whose jobs will go, but what about the people who may now face a real fight to keep a roof over their heads?

The bank will wind down its mortgage business to release money faster to the Treasury. This process will be achieved by discouraging mortgage customers to stay with it through the blunt and potentially very damaging weapon of keeping their rates higher than average.

Northern Rock's standard variable rate is already a punishing 7.59 per cent, compared with a norm of around 6.8 per cent. Those who can afford to do so will grin and bear it, get to the end of their mortgage deal and go to a lender that actually wants them, but many other customers simply won't be able to manage. These people face arrears, a damaged credit record and even repossession. Bank of England rate cuts won't help them if the Rock doesn't pass them on.

Even worse, put yourself in the shoes of one of the bank's Together customers – those with a 125 per cent mortgage. With house prices falling, they are in negative equity, so they won't be able to remortgage away from the Rock as no other lender will touch them. They will just have to sit tight and hope the high rates don't bring them to their knees.

In the dash to give taxpayers their money back, it mustn't be forgotten that the Rock has a duty of care to its borrowers. The Financial Services Authority, which was dunce-like in its handling of the original Rock crisis, should remind the bank of its responsibility to treat customers fairly.

Energetic it isn't

Ofgem, the energy regulator, has announced it is going to investigate the gas and electricity market. This is only a few weeks after chief executive Alistair Buchanan brushed aside calls from consumer groups and this newspaper for just such an inquiry.

Now Ofgem says it has an open mind and that it will be looking at the market in-depth. This begs the question, what has it been doing these past three years while our bills have soared?

Consumer groups and charities tell me that Ofgem is far too close to the industry. Take its almost total inaction when energy firms held back on passing on cuts in the wholesale price of gas and electricity during most of 2007. The result of Ofgem sitting on its hands could be seen in Centrica's huge profit rise last week.

Now we face the long haul of an investigation which, even if Ofgem does find anything untoward, will only lead to another probe by the Competition Commission. If anything is ever done, we're looking at 2010 at the earliest. Perhaps it would have been better, given Ofgem's track record, if the market had been referred straight to the competition authority.