Call to ban derisory savings rates: Banks trading on savers’ ‘ignorance and inertia’ and should face tighter regulation in savings market
High street banks are trading on savers’ ‘ignorance and inertia’ and should face tighter regulation in the savings market, according to leading savings experts.
The interest on best value, easy access accounts has risen sharply in recent months as the Bank of England base rate has notched up. The top rate is now 3 per cent a year, but some high street savings brands still pay derisory rates.
Pain: The top savings rate is now 3 per cent a year, but some high street savings brands still pay derisory rates
For example, Santander pays 0.2 per cent on its easy access account, Barclays pays 0.25 per cent, Nationwide 0.3 per cent and Lloyds 0.4 per cent. This means millions of loyal customers who stick with a big bank or building society miss out.
Ewan Edwards, director of savings at challenger bank Aldermore, says: ‘There is a huge delta between the savings rates offered by high street and challenger banks – and it is growing as interest rates rise.
‘The truth is that the big banks are trading on the ignorance and inertia of their customers.’
Two years ago, the City regulator, the Financial Conduct Authority, dropped proposals to introduce a ‘single easy access rate’.
This would have required all providers to offer just one easy access rate, although they could offer bonus rates for up to 12 months. This would have made it easier for savers to compare rates. Edwards calls this a ‘missed opportunity’.
The FCA says it is monitoring the savings market and could revisit its proposals if it sees evidence of widespread consumer detriment.