David Prosser: From Iceland with love to savers
Saturday 14 October 2006
Britain's financial services industry is supposed to be competitive. So why is it that when it comes to one of the most basic products on offer, a good old-fashioned instant access savings account, Britons have to depend on foreign banks for a decent, straightforward deal?
Landsbanki, Iceland's oldest bank has this week launched into the UK for the first time, with an internet-based savings account paying 5.2 per cent a year. Not only is the rate on offer the best deal in its sector, it doesn't depend on gimmicks and tricks to get it to the top of the best-buy tables.
Better-known British savings providers, on the other hand, are desperate to get their hands on your money, but don't want to play fair. Alliance & Leicester's Direct Saver account, launched at the same time as Landsbanki's deal, is typical. It purports to pay a generous 5.25 per cent a year, but , you earn no interest in months when you make a withdrawal. In other words, it's effectively a one-year savings bond - and the best rates in that sector of the market are a full percentage point higher.
The other trick with which savings providers are obsessed is the introductory bonus interest offer. So, for example, Abbey's eSaver account, offers a decent looking headline rate of 4.85 per cent a year, but you only earn that much for six months. The introductory bonus interest of 0.5 per cent then falls off, and you start earning 4.35 per cent, more than a tenth less.
Landsbanki's launch into the UK is reminiscent of the splash made by the Dutch bank ING when it moved into the UK savings market in 2003. It quickly captured a market-leading share of new savings money, partly as the rate on offer was very good, but also because the deal hadno short-term interest bonuses or hidden small-print.
Like ING, Landsbanki will almost certainly take a little time to attract savers. In time, however, expect the Icelandic bank to give the likes of Abbey and A&L a bloody nose.
Good luck to it. Saving should be simple, but British providers seem to have an unerring dedication to sharp practices. They shouldn't be surprised when savers' cash starts disappearing off to a small island in the middle of the North Atlantic.
The Department for Trade & Industry's latest initiative on data sharing by credit card companies and other lenders is long overdue. It wants to repeal data protection laws that prevent lenders sharing information about how much their customers have borrowed and are repaying.
This lack of data sharing can prevent lenders spotting customers whose borrowing is getting dangerously out of control, even though they don't currently seem to be defaulting on the debt. Borrowers who are making at least the minimum repayments on all their accounts have been able to go on taking out new debts, despite having no chance of ever being able to repay the money in full.
Since the late Nineties, lenders have been entitled to share such information automatically. But up to 40 million accounts opened before then are still covered by old data protection laws. Many of these are current accounts with overdrafts, but other types of debt are also included.
That's a worrying black hole in the information that lenders have about credit applicants. People may not like their finances being scrutinised so closely, but if we want to encourage responsible lending, we have to give banks and credit card lenders the information they need to make more accurate assessments.
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Bargain Hunter: From The Outsider to 1984, catch a cut-price classic, read it in the rye
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Energy switching app Voltz allows users to switch with just a few taps
Money Insider: Smart alternatives to the pensioner bond
- 1 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 Men behaving badly: Urinating while standing, 'manspreading' and the gendering of selfishness
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village