A hedge fund and 150,000 small shareholders in Northern Rock stepped up their campaign on Thursday to win greater compensation from the government following the nationalisation of the Newcastle-based bank.

SRM Global, the Monaco-based fund that held 11.5 per cent of Northern Rock, has joined the UK Shareholders Association, which represents private investors who owned about 25 per cent of the bank. They have formally asked the High Court to investigate the legality of the conduct of the government, the Bank of England, the Treasury and the Financial Services Authority.