Laura Sharpe looks at how the Lehman Brothers crash could affect you

Sep 16 2008 by Alistair Houghton, Liverpool Daily Post

ALTHOUGH nobody has a Lehman Brothers bank account, the impact of the Wall Street bank’s collapse is likely to be felt by mill-ions around the world.

Most of the UK’s banks and pension funds have dealings with Lehmans and unwinding the com-plex deals could take months. Ian Howarth, business development manager at Liverpool-based independent finan-cial advisory firm Parker Kelly, He said: “The collap-se is likely to set alarm bells off again as it was thought the decision by the US Federal Reserve to back Fannie Mae and Fred-die Mac would be a turning point. The average saver shouldn’t be overly wor-ried as there is a govern-ment compensation scheme in place.

“In fact, the genuine saver can benefit at the moment because of the lack of liquidity in the market. Banks need the money so are offering good rates on deposits, in some cases 6-7%, so it may be worth switching accounts.”

Howard Hackney, partner at Liverpool’s Grant Thornton, said: “It is unlikely any UK bank will fail. After what happened to Northern Rock the government took the risk and will protect savings. The worst thing to do is pull out of the stock market while the share price is low because you won’t get your money back. You need to make sure you have a balanced portfolio, spreading the risk across other sectors.”

However, Mr Hackney warned: “Pensions are linked to stock market returns and any stock market losses can result in a devalue of pension funds.”

Yesterday’s events are likely to add to the woes of the already badly hit hous-ing market. Those seeking to buy a house may find that it has become even harder to raise a mortgage.