The UK Shareholders Association (UKSA) has formed a group to represent the interests of ordinary shareholders in Northern Rock amid accusations that the bank failed to make required disclosures to investors about the severe financial difficulties it faced.

UKSA believes many shareholders were persuaded to invest in the company in recent months as a result of the apparent strength of the business, when in reality Northern Rock was in serious financial trouble. This information, said UKSA, was not made publicly available as it should have been, and as a result shareholders suffered major financial losses.

Furthermore, the shareholder group is concerned that longer-standing investors will suffer if the company is sold quickly and at a valuation that does not represent its underlying strengths and assets.

UKSA is suggesting that changes to Northern Rock’s board be considered in order to re-establish confidence in the company’s management.

This came as Northern Rock announced the axing of its interim dividend. The board announced it was in discussions regarding the sale of the company, and said a payment will not be appropriate until a full announcement regarding the outcome of these talks can be made.

Alex Brummer, the Daily Mail’s city Editor (26 September), backed the decision to scrap the dividend, arguing the sight of a badly-run bank, propped up by government loans, dishing out cash to shareholders would have been unacceptable. However, he said, like all other decisions around this situation, the move was hurried, disorganised and incoherent.