The rise of the better-known challenger banks

02nd February 2018

As the battle of the best buy tables has raged on into 2018, we have also seen more of the brands that many will be more familiar with, returning to the best buy tables.

As the Funding for Lending Scheme (FLS) and Term Funding Scheme (TFS) taps are turned off, it’ll be interesting to see if any of the high street providers, as well as these better-known brands will turn back to savers. For more information about FLS please read our recent article Finally, the Funding for Lending Scheme is to end.

Before FLS was introduced, high street providers such as Santander (via the Santander and Cahoot brands), Bank of Scotland (via the Halifax, Saga, AA and Birmingham Midshires savings brands) and Nationwide, were regularly offering the best rates available. Today most of these are nowhere to be seen.

However Virgin, Tesco, AA and Post Office are a few of the better known brands which are once again becoming regularly featured.

But it’s important to check who is behind the brand, especially if you are depositing more than £85,000.

Bank of Scotland for example, as mentioned above has a number of brands under which savings accounts are available – but they share a banking licence and therefore only £85,000 of the total amount saved in all of the linked brands is protected - not £85,000 per brand.

And to further complicate matters, since 2nd September 2015, AA savings accounts have actually been provided by the Bank of Ireland UK, as opposed to the HBOS group.

Post Office savings sccounts are also provided by the Bank of Ireland UK, so if you were to put £85,000 into the current best buy Post Office Online Saver Issue 28 and £20,000 into the AA Cash ISA Easy Access Issue 14, not all of your money would be protected by the Financial Services Compensation Scheme.

Its great to see some of these familiar brands helping to drive savings rates in the right direction, but its also important to make sure you know who you are ultimately saving with, as a brand can be sometimes be just a marketing tool.

For more information on the FSCS, please take a look at our handy guide or call us on 0800 321 3581 to speak to one of our expert savings advisers.  

 

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