THE SAVINGS SCROOGES
EXPOSED: These building societies (29 out of 45) have failed to pass on ANY of the Bank rate rise to savers
to say that we are expecting more of the same this time around. The link between base rate and savings rates has become irrevocably severed. Savers are being punished unmercifully.’
The savings expert is so outraged that she believes some providers should be held to account for the ‘unethical way they are treating their customers’.
Last month, the City regulator outlined plans that would require banks and building societies to pay a minimum ‘basic’ savings rate on all easy access accounts and cash Isas open for more than a year.
The tardy response to the last two rate hikes now makes it more likely that the Financial Conduct Authority will go ahead with such a move. Its research indicates that savers could be £300 million a year better off if such a basic savings rate were introduced, although such an initiative has received criticism from some quarters. This is because t he regulator would allow banks and building societies to determine t heir own basic rate – only stepping in if it deemed the rate not to be fair.
WHERE WE ARE NOW
DATA from Savings Champion indicates that only 32 financial institutions have so far adjusted savings rates in response to this month’s base rate rise. But few of these have passed on the full 0.25 percentage- point increase to all savers – the exceptions being building societies Beverley, Holmesdale and Swansea. Barclays Bank has restricted increases to between 0.05 and 0.1 percentage points, while Royal Bank of Scotland has applied rate rises of between 0.05 and 0.2 percentage points. Some rates have been left untouched. Bowes is disappointed that the mainstream banks have given little extra interest to customers who have popular instant or easy access accounts. She says: ‘Lloyds Bank has increased rates on just two of its accounts. But it has chosen to ignore savers who have f unds i n Easy Saver. This will continue to pay 0.2 per cent.’ Barclays has tickled up its Everyday Saver rate by just 0.05 percentage points, while HSBC Flexible Saver, NatWest Instant Saver and Santander Everyday Saver rise by only 0.1 points.
The decision of 29 building societies to hold back on higher savings rates – some may well push up rates before the end of the month – means some of their accounts are now paying what can only be described as derisory rates. For example, Darlington offers interest of between 0.05 and 0.1 per cent on Instant Access while Dudley pays the same on Instant Tracker (a misnomer – it tracks nothing).
Loughborough is paying 0.2 per cent on Instant Access, while the rate on Melton Mowbray’s Instant Access Share is 0.1 per cent – rising to 0.25 per cent on balances above £100,000. Tipton & Coseley Easy Access and Vernon’s Instant Access offer a respective paltry 0.1 and 0.05 per cent.
Some building societies admit that a desire to remain competitive in the mortgage market has stopped them pushing up savings rates.
Leeds says: ‘We have kept our standard variable mortgage rate at 5.69 per cent and as a result we have not committed to increasing variable savings rates, which compare favourably against the market.’
Nottingham says: ‘We continue to assess the positives of an increase for savers against increased rates for mortgages.’