Following a recent meeting with the Financial Conduct Authority (FCA), it’s good to see that some of the high street banks appear to have reacted to the criticism that they are not passing savings rates onto their customers, or telling them about better deals – but is all as good as it seems?
Santander this week ‘streamlined’ its on-sale savings products in advance of new Consumer Duty principles that come into force at the end of July – amending the access channels and names of some accounts and taking others off sale.
On the plus side, it is good that Santander is increasing the rate on its on-sale easy access account to 2.50% AER and making what was a previously online only account available to branch and telephone banking customers too. This feels like a real improvement for customers.
But on the flipside, existing customers need to check what they are being offered. For example the Everyday Saver which was the key easy access account available via branch as well as online until this week, has been removed from sale and the rate has only increased from 0.85% to 1%.
Barclays has also announced some rate hikes, but once again it’s not completely straightforward. On its standard easy access account, Everyday Saver, the bank has re-introduced a tier to the account. If you have less than £10,000 your rate has increased to an underwhelming 1.51% AER - but if you have more, you are stuck on 1% - no rate rise at all this time around!
This is all smoke and mirrors that savers often won’t spot and the devil is in the detail. Plus, the banks are unlikely to tell their customers that they could earn more if they were to switch to another account offered, paying a better rate.
According to an article in the Financial Times (FT), banks told the Financial Conduct Authority (FCA) that they could not tell some savers about better deals, if they had opted out of marketing communications. According the FT’s source, the FCA and the Information Commissioner’s Office plan to write to the banking lobby group, UK Finance, to tell the banks that they can communicate better savings rates and still meet Data Protection rules.
With Banks hiding behind Data Protection and GDPR as an excuse for not letting customers know that they could be getting a better deal if they transfer internally to another account, savers still need to be proactive if they want to make sure they are earning as much as possible.
But the bottom line is that even if the banks do communicate any better accounts they have to their loyal customers, savers are likely to be able to earn far more elsewhere.
At the moment, Shawbrook is offering 4.52% on its unrestricted Easy Access Account Issue 36 on balances of £1,000 or more. On a balance of £10,000 you can earn either £250 a year in the new Santander Easy Access Saver, or £452 with Shawbrook – although the latter is only available online. The top unrestricted access branch and postal easy access account currently available is the Skipton Bonus Saver which is paying 4.45% AER including a bonus of 0.62% for 12 months – still significantly more than Santander and the other high street banks.
And if you can tie up your cash, you could earn up to 6.05% AER with Atom Bank on their 1 Year Fixed Saver.
While inflation continues to stay stubbornly high, getting as much as possible from your cash savings is important. Don’t accept poor interest rates. Keep an eye on our Best Buy tables to see how much more you could be earning.
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