Simon Read: Ban teaser savings rates and repay our lost interest, please
Sometimes I find myself banging on about things for so long that eventually I assume that nothing will happen. But after years of complaining about misleading introductory rates on savings accounts, the City watchdog finally acted this week to launch an investigation into them.
The problem is the teaser rates that make savings accounts look attractive when they are actually absolutely awful. They've become endemic in the finance industry and are, in my view, nothing short of misleading trickery.
At random I googled "savings accounts" this week and was led to the Halifax ISASaver Online which pays 1.35 per cent. Only it doesn't. It actually pays a pathetic 0.25 per cent and includes a 12-month fixed bonus of 1.1 per cent.
The end result, once the teaser period ends, is for the interest paid on the account to become negligible. That means savers who've taken the time to find what they think is a decent account end up being penalised. Of course the Halifax is far from the only finance firm trying the same trick. In fact Which? discovered some 1,300 savings accounts that have ended up paying ultra-low rates.
So I'd like the Financial Conduct Authority to speed up its investigation and ban the tricky teaser rates. In fact I'd go much further. I'd force all financial institutions that have tricked people into low-paying accounts to put things right. They should put customers' cash into decent accounts and repay all the back interest they've lost out on.
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