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.
Questions of Cash: Bupa costs bore no relation to what I'd been quoted
Mark Dampier: Fidelity stays true to China and investors should keep the faith too
Five Questions On: Pensions advice
Problem gambling: Amid heavy advertising and a surge in remote sports betting, more and more 16 to 24-year-olds are now seen as 'at risk'
Gardens add a tenth to the value of your home
- 1 Man tweets about bad service, gets kicked off plane, told to delete tweet before re-boarding
- 2 Crash victims in car flattened by shipping container emerge with just minor injuries
- 3 Students offered grants if they tweet pro-Israeli propaganda
- 4 Exclusive: David Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
- 5 Joey Barton and Yossi Benayoun become involved in Twitter row over Israel-Gaza conflict
A day in the life of Vladimir Putin: The dictator in his labyrinth
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...
Day In a Page
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
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar