While some institutions have moved their savers into higher interest- paying accounts many are sitting tight, claiming they cannot force customers to switch against their wills.
But their argument was badly dented last week by the announcement by Nationwide, the second-largest building society, that it is to pay an appropriately competitive rate of interest to all clients in obsolete accounts.
Among those who are still refusing to switch their account-holders are some of Britain's biggest high street names, including Halifax, Bristol & West, Abbey National and the Woolwich, Midland and Royal Bank of Scotland.
Nationwide's move now puts great pressure on them to follow suit. The Halifax's stance already conficts with the Leeds Permanent, with which it plans to merge this year. The Leeds, which has come up with the £800m figure, decided to move all its savers into higher-paying accounts last year.
Birmingham Midshires and National & Provincial have already transferred their customers to "live" accounts. Britannia and Cheltenham & Gloucester are in the process of doing so, as is TSB. The reluctance of many institutions to switch clients has angered the independent consumer guide Which? Its editor, Graeme Jacobs, said: "Many savers feel cheated. Existing savers effectively subsidise high rates for new customers."
Obsolete accounts can occur because many of today's societies are the result of amalgamations. In other cases would-be savers are offered high rates for opening an account and then, a year or two later, the rate drops. A new generation of customers is offered more money while the rest languish on the lower rate.
Keeping savers in obsolete accounts can add tens of millions of pounds to the bottom line. The difference for individual savers may come to less, but is no less painful.
For example, Birmingham Midshires decided in December to move about 300,000 of its customers from the Ordinary Share Account, which paid 0.25 per cent interest a year, to its Quantum Instant Access account, paying up to 5.35 per cent gross.
Someone with £2,500 in the Quantum account would receive 4 per cent, or £100 a year before tax. Had they stayed in their old account the interest would have been just £6.25 before tax. In some cases savers had up to £100,000 in their accounts.
Banks and societies argue that they already take great steps to tell customers what is happening. The Halifax's comments were typical: "What we have done over the past few years is publish rates on old accounts prominently in all our branches. Any time a customer gets a statement we would put an appropriate message on it.
"Over the last 18 months we have written individually to every customer with a reasonable-sized balance in a closed or obsolete account, pointing out the advantage of moving.
"We have also arranged for local branches to make contact by telephone to ensure the message has been understood.
"Of the customers that we have contacted 85 per cent have decided not to take our advice. The message we get back is they will transfer as and when they decide."
The Halifax spokeswoman added that no decision has yet been taken on whether the Leeds' or Halifax's views on account transfers will prevail after the merger. However, this argument is rejected by those who have completed the switch. Simon Craven, communications manager at Birmingham Midshires, said: "A couple of years ago, roughly one in 10 customer complaints we received were about low-yielding discontinued accounts.
"Now, after a carefully-managed trade up campaign these complaints have ceased.
"Although the cost of such a switch runs into many millions of pounds, this is not an either-or situation." He added that increased customer satisfaction led directly to more accounts being opened and more use of the society's services.
Which? recommends account holders should take the following steps to get the best rates.
qVisit your bank or building society branch and look for a notice or leaflet listing all its savings accounts. If there is a comparable account offering better rates, switch. Many societies impose no charge for this.
qRead your post to see whether it has information on accounts.
qIf your society is merging, or is taken over, check rates again as there is bound to be a reworking of accounts.
qIf you think your bank or building society has failed to keep you informed about savings rates, give it every chance to sort out the problem. Then complain to the Building Society Ombudsman or Banking Ombudsman. Be aware, however, that they expect savers to take reasonable steps to keep up to date with changes.
qIf you are still unhappy, close the account and move elsewhere. MoneyFacts, a monthly guide to savings, investments and mortgage rates, operates a daily update service, faxing a selection of best rates on request.
Building Societies Ombudsman, 0171-931 0044. Banking Ombudsman, 0171- 404 0944.
MoneyFacts savings selection is on 0336 400238. Dial this number on your fax machine. Press the START button. The fax will come through on your machine. Calls cost 39p cheap rate, 49p at other times.Reuse content