Five Questions On: Savings rates

 

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The Independent Online

They're at an all-time low aren't they?

They are but there needn't be so many savings accounts paying rock-bottom interest rates. A damning report from the Financial Conduct Authority published this week revealed that Britain's savers are being ripped-off.

Ripped-off? How?

Savers are being let down by banks and building societies which fail to tell them about the best interest rates or make it clear how poor the rates paid on existing deposit accounts are. The City watchdog's investigation revealed that around £160bn – about a fifth of our total savings – was held in easy-access savings accounts that pay interest lower or equal to the Bank of England base rate of 0.5 per cent.

Crikey, that's really poor. What's being done about it?

The regulator has made a series of demands mainly aimed at forcing banks and building societies to play fair with savers by telling them more. It wants providers to be clearer about how cuts in interest rates are applied the longer a consumer holds an account and display prominently the lowest rate of interest any of their customers receive.

That sounds positive. Is it?

It's a start. But critics say that they've missed a real opportunity to improve things by failing to scrap teaser rates, which are designed to attract savers with market-leading offers and then leave them languishing on less-than-pathetic interest often of 0.1 per cent or lower.

Why didn't the FCA do something about them?

It claimed: "They can benefit some customers." While it's true that a few profit from them, the majority have suffered, and that's not fair. The likes of NatWest and Nationwide have led the way in scrapping unfair introductory or bonus rates, and the rest of the savings industry should follow. It's disappointing the FCA failed to clean up the industry.

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