During the Northern Rock non-crisis last week, I was struck by the realisation that the banking system doesn’t really help the little man. This probably won’t come as a surprise to anyone: the law has always favoured powerful interests.

If you are an investor in a bank that goes bust—that is, if they owe you money—you’re only guaranteed part of your investment:

Banks are already covered by the Financial Services Compensation Scheme which protects 100% of the first £2,000 in any bank account and 90% of the next £33,000—giving a maximum payout of £31,700 if a bank did go bust.

On the other hand, if you owe the bank money, you still have to pay all of it:

[The] mortgage, along with all the others, would, in all probability, be sold off to another mortgage company who borrowers would then pay for the remaining life of their loan.

There are hints that the FSCS limits may be increased, but, in the meantime, don’t keep all your money in one place—and don’t trust The System to have your best interests at heart!