Terms of the Valuation
Q1: What are the terms of the Northern Rock Compensation Scheme Order 2008? Back to top
A: The terms of the Northern Rock plc Compensation Scheme Order 2008 were set by Parliament. The full terms of the Compensation Scheme can be found here:
http://www.opsi.gov.uk/si/si2008/pdf/uksi_20080718_en.pdf
It was amended with effect from 26 March 2009, by the Northern Rock plc Compensation Scheme (Amendment) Order 2009. The full terms of that Order can be found here:
http://www.opsi.gov.uk/si/si2009/pdf/uksi_20090791_en.pdf
The amendments deal principally with access to information that the Independent Valuer needed to conduct the valuation.
Q2: What were the statutory assumptions that the Independent Valuer was required by law to apply? Back to top
A: When undertaking his valuation, the Independent Valuer was required to apply the statutory valuation assumptions set by the Banking (Special Provisions) Act 2008 and the Northern Rock plc Compensation Scheme Order 2008.
These statutory valuation assumptions are that:
• all financial assistance provided by the Bank of England or HM Treasury to Northern Rock had been withdrawn;
• no financial assistance would in future be provided by the Bank of England or HM Treasury to Northern Rock (apart from ordinary market assistance offered by the Bank of England subject to its usual terms);
• Northern Rock was unable to continue as a going concern; and
• Northern Rock was in administration.
Q3: How can you say that the process was independent given that the statutory valuation assumptions, which were core to the valuation, are so controversial? Back to top
A: The Independent Valuer reached his final determination independently. It was for him – and not the Government – to determine the amount of any compensation payable under the Northern Rock plc Compensation Scheme.
When undertaking his valuation, the Independent Valuer was required by law to apply the statutory valuation assumptions set by the Banking (Special Provisions) Act 2008 and the Northern Rock plc Compensation Scheme Order 2008.
Q4: How can the Independent Valuer have given his final determination when there is a judicial review case ongoing? Back to top
A: The Independent Valuer was required to conduct the valuation applying the valuation assumptions in the legislation, which have been upheld following legal challenge in the High Court and the Court of Appeal. The shareholders who challenged the legislation sought permission to appeal to the Supreme Court, but this permission was not granted. They have indicated that they wish to take their challenge to the European Court of Human Rights in Strasbourg.
In circumstances where legislation has been upheld by the High Court and the Court of Appeal, it was appropriate that the Independent Valuer proceeded with the valuation.
Q5: Considering the parameters placed on the Independent Valuer by the Government, wasn't the outcome inevitable? Back to top
A: The legislation clearly states that the Independent Valuer was independent. It was for him – and not the Government – to determine the amount of any compensation payable under the Northern Rock plc Compensation Scheme.
When undertaking his valuation, the Independent Valuer was required by law to apply the statutory valuation assumptions set out in the Banking (Special Provisions) Act 2008 and the Northern Rock plc Compensation Scheme Order 2008.
Q6: Do you intend to provide some background as to why Northern Rock was transferred into temporary public ownership, instead of sold to the private sector? Back to top
A: The decision to transfer Northern Rock into temporary public ownership was a decision taken by the UK Government. The Independent Valuer cannot comment on this decision, which is outside the scope of his appointment.
Q7: Why did the Government not simply support Northern Rock as they have other UK banks, rather than transfer it into public ownership? Back to top
A: The Independent Valuer cannot comment on the Government’s decisions with regard to the transfer of Northern Rock into temporary public ownership and the decisions that have been taken with regard to other financial institutions, which are outside the scope of his appointment.
This is not a Northern Rock website. Northern Rock plc is not responsible for nor has it approved the content of this website. This website is owned by BDO LLP. Its purpose is to provide information to former shareholders and other interested parties regarding the work of the independent valuer under the Northern Rock Compensation Scheme.