LOYAL SAVERS TREATED AS CASH COWS

SAVERS have had a rough time for over ten years, having to endure rockbottom interest rates and watching the real value of their savings being whittled away by inflation.

Nine out of ten savers usually put their money into short-term saving products, such as instant access or short-notice accounts and cash Isas.

Unfortunately, it seems that far too frequently, the most loyal customers are treated as cash cows, being given poor rates, while the best rates are offered on newly launched products.

The savings landscape has become increasingly complicated for customers — is this a calculated strategy to increase bank profitability at the expense of savers who cannot keep up with all the changes.

Central banks have kept shortterm rates so low for so long, and have printed trillions of dollars, pounds and euros to drive down long-term interest rates, too, flooding the banking system with new money. This has left savers finding it increasingly challenging to identify the best place to park their savings.

Hard-pressed savers, seeking decent returns, have been forced to hunt around to try to find which institution is offering the better rates, but this needs to be almost a constant search, as products change all the time.

Why did savings become so bafflingly complicated? Has there been a concerted effort by some banks to make savings accounts increasingly difficult to keep up with?

Nowadays, there are around 2,000 accounts to choose from, and the difference between many of them seems negligible.

Money Mail reports some staggering examples — such as one account that has 52 pages of terms and conditions, Yorkshire Building Society has 28 different saving accounts and Virgin Money released 32 versions of the same account.

How can savers possibly get the best value when saving has become such a chore? The time taken to ‘shop around’ to find the best account can be wasted if a new account is released the following week with better terms. Bank of England interest rates do not change that frequently, but retail banks seem to continually alter their offerings.

The UK savings rate is already at a record low, and debt has risen to worrying levels, so discouraging or penalising savers is not helpful for the economy. These constant rate-adjustments

and new account launches seem designed to confuse consumers as well as bamboozle loyal customers into staying with poor value products, while offering new savers better rates.

This complicated web of savings products is reminiscent of practices carried out by insurance companies who have been charging higher premiums to loyal long-standing customers than those on new policies.

The Financial Conduct Authority has started to clamp down on these egregious practices, and it is time for a look at how banks are operating as well.

If the regulator is satisfied, then savers will at least know that the matter has been considered on their behalf and, perhaps, there can be more transparency on rates.

CURRENTLY, there is too much complexity and confusion, and this is not in the customer interest. Many savers are languishing in low-rate products that were once top paying.

The Government is also guilty of making savings increasingly complicated. The original concept of Isas was a simple savings product, making it easy for people to put money away for the future, tax-free.

However, over the past few years, new types of Isas have been introduced which are much more complicated. Help To Buy, Lifetime Isa, Cash Isa, Stocks & Shares Isa, Junior Isa — almost one for every day of the week.

The Mail’s campaign to ‘ simplify savings’ is an excellent idea. Naming and shaming the worst offenders, who pay miserly rates to their loyal customers, or keep launching similar- sounding products which are almost identical to existing ones, may help to identify those who are not treating customers fairly.

I do hope the banks will take notice and begin to look after savers better at last.