The Daily Telegraph - Saturday - Money
‘It’s so misleading’: banks under fire for sub-par rates
Hard-pressed savers could be missing out on billions of pounds in interest each year as major providers continue to offer savings rates well below Bank Rate.
High street banks have also been criticised for describing their accounts in a misleading fashion.
Research conducted by the website Savings Champion for Telegraph Money showed that 52pc of all easyaccess accounts on the market today pay less than the 0.5pc Bank Rate.
Its analysis of Bank of England data found that savers with cash in easyaccess accounts are missing out on a combined £6bn of interest every year.
Yet misleading names and confusing literature have left many customers thinking their savings accounts offer better returns than they actually do.
Telegraph Money found examples of savings accounts with names that suggested they offered competitive returns. The HSBC Preferential Flexible Saver boasts of superior rates to the bank’s standard Flexible Saver, but it pays just 0.1pc, a mere 0.05 of a percentage point more.
West Bromwich Building Society’s Premium Share account pays 0.2pc to savers, while Danske Bank Midas Gold offers just 0.15pc. The NatWest Premium Saver Account pays 0.1pc to those with less than £25,000.
Anna Bowes, of Savings Champion, pointed to the Halifax Liquid Gold account, with a rate of 0.1pc, as one of the worst offenders, although this is no longer available to new customers.
“Savers need to be alert in order to stay on top of what they are actually earning,” she warned. “Having a fancy name such as Liquid Gold or Premium Saver does not mean you are getting a good deal. And with some providers launching issue after issue of the same account, paying different rates for each issue, it’s not always simple to be sure what your cash is earning. It’s unlikely to be the rate that is advertised on the website or in the shop window.”
Charlotte Nelson, of financial analysts Moneyfacts, echoed these complaints. “With account names such as Exclusive, Gold, Loyalty and Premier it is little wonder that customers are sucked in,” she said. “These accounts may give the impression that they are paying competitive rates of interest. However, customers will often find that they pay far less than the best deals on the market.”
The City regulator, the Financial Conduct Authority, used to name and shame some providers on its website as part of a trial, later discontinued.
It told Telegraph Money that all firms had an obligation to be “clear, fair and not misleading” and that it planned to consult with the industry on how savers could switch more easily from poor-value accounts.
Halifax, HSBC, NatWest and West Brom each said they offered a wide range of products to customers. Danske Bank said its Midas Gold account was now under review.
Names such as ‘Liquid Gold’ suggest much better rates than the ones savers get, writes Adam Williams
Miss Nelson said the onus was on savers to check their interest rates carefully. “Savers need to try not to be wowed by the headline-grabbing name promising riches and focus their attention on the interest rate instead,” she said.
Ms Bowes criticised the information some banks provided to savers, arguing that they were often not clear what rate applied to each account.
She said: “The regulator needs to review the wording and names that providers use to make sure it is honest and in plain English.”
Rather than rewarding loyalty, many banks move cash into their lowest-paying accounts once a customer’s introductory deal ends.
Ms Bowes said the average rate for an easy-access account was 0.46pc, much lower than the top rate on the market – 1.3pc from Kent Reliance.
“Take matters into your own hands and show them a clean pair of heels and hopefully these providers will start to take notice and change their ways,” ys, she said.