Call to ban ridiculous savings rates: banks act on the ‘ignorance and inertia’ of savers and must face stricter regulation in the savings market
main Street banks act on the ‘ignorance and inertia’ of savers and, according to leading savings experts, should face stricter regulation in the savings market.
Interest on easily accessible best value accounts has risen sharply in recent months as the Bank of England’s base rate has risen. The top rate is now 3 percent per year, but some well-known savings brands still pay ridiculous rates.
Pain: The highest savings rate is now 3 percent per year, but some well-known savings brands still pay ridiculous rates
For example, Santander pays 0.2 percent on its easy access account, Barclays 0.25 percent, Nationwide 0.3 percent and Lloyds 0.4 percent. This means that millions of loyal customers who stay with a major bank or building society are missing out.
Ewan Edwards, savings director at challenger bank Aldermore, says: ‘There is a huge gap between the savings rates offered by high street and challenger banks – and it’s widening as interest rates rise.
“The truth is that the big banks act on the ignorance and inertia of their customers.”
Two years ago, the city’s regulator, the Financial Conduct Authority, dropped proposals to introduce a “single easy access rate.”
This would mean that all providers would only have to offer one basic 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 might review its proposals if it sees evidence of widespread consumer harm.