Call to ban paltry savings rates: Banks trade on savers’ ‘ignorance and inertia’ and set to face tougher regulation in savings market
high street banks are trading on the “ignorance and inertia” of savers and should face tougher regulation in the savings market, say leading savings experts.
Interest in best value, easy to access accounts has risen sharply in recent months as the Bank of England’s base rate has risen. The highest rate is now 3% per year, but some retail savings brands are still paying ridiculously low rates.
Pain: The highest savings rate is now 3% per year, but some retail savings brands are still paying ridiculously low rates
For example, Santander pays 0.2% on its easy access account, Barclays pays 0.25%, Nationwide 0.3% and Lloyds 0.4%. This means that millions of loyal customers who remain loyal to a major bank or building society are left out.
Ewan Edwards, director of savings at challenger bank Aldermore, said: “There is a huge delta between the savings rates offered by high street banks and challenger banks – and it increases as the rates of interest increases.
“The truth is that the big banks trade 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 entry rate’.
This would have required all providers to offer a single easy-access tariff, although they could offer bonus tariffs for up to 12 months. This would have made it easier for savers to compare rates. Edwards calls it a “missed opportunity.”
The FCA says it is monitoring the savings market and may revise its proposals if it sees evidence of widespread harm to consumers.