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Savers 'spurning banks'

  • @ukmoneyguru

The recent spate of banking scandals, such as Libor fixing, coupled with a lack of trust and chronic low interest rates mean that savers are turning their backs on traditional high street banks, a survey suggests.

Seven out of ten Britons surveyed by peer-to-peer lender Funding Circle said they would much rather invest with a British business than put their money in a savings deposit account, paying record low rates of interest. Funding Circle says it has seen an 89 per cent surge in people joining since the Libor-fixing scandal broke in June.

Samir Desai, CEO and co-founder of Funding Circle, said this reflected Britons' malaise with the banks and poor savings rates: "The downturn and endless tales of bad behaviour by the banks has ignited a passion in UK savers. It's not about abandoning the banks completely but rather taking control and looking for smart alternatives."

However, savers, looking to invest in business, have been warned recently by the City watchdog, the Financial Services Authority, that this is a far-from-safe place for hard-earned cash. The FSA warned investors that so-called crowdfunding schemes, where businesses pitch their product or idea to attract start-up capital, are complex and high risk.

Meanwhile, the campaign group Save our Savers has found Britons are saving a lower proportion of their incomes than nearly every other European country.