Nationwide, the second-largest building society in Britain, yesterday announced that it will boost the interest paid on its obsolete accounts to the nearest current equivalent, dealing a critical blow to a practice that costs savers up to £800m a year.
The society's decision means that thousands of its account-holders will see the amount of interest they receive uprated by up to 4 per cent before tax in some cases.
Nationwide joins other societies, including Birmingham Midshires, Leeds Permanent and National & Provincial, all of which have either increased rates on their obsolete accounts or switched customers to higher-paying ones.
A Nationwide spokeswoman said: "In some cases there are practical difficulties in that some of our closed accounts pay slightly more than existing ones. But where that is not the case, we will pay them more."
Simon Craven, communications manager at Birmingham Midshires, which shifted 300,000 customers to higher-paying accounts before Christmas at a cost of £13m, yesterday welcomed Nationwide's decision. He said: "This blows a huge hole in the defences of those societies which argue that change is impossible. It will now be increasingly difficult for other societies to resist their members' demands for them to do the same."
Among those refusing to switch their account-holders are some of Britain's biggest high street names, including Halifax, Bristol & West, Abbey National, Woolwich, Midland Bank and Royal Bank of Scotland.
In the Halifax's case, this places it in direct confict with Leeds Permanent, with which it plans to merge later this year.Reuse content