SAVINGS SIMPLIFICATION - A ruse for simply cutting more savings rates?

28th November 2014

As the number of so called legacy savings accounts has grown over the years, more and more providers have implemented a simplification of their range, in many cases cutting the number of accounts by more than half. However, not all savers will be pleased as many accounts have suffered a rate reduction.

As if providers need another excuse to cut their existing savings rates, more appear to be using the simplification process as a ruse to simply cut old accounts that in some cases are paying more than the current best buys. In contrast however some accounts or tiers on accounts (depending on your balance) have been increased, so it’s really the luck of the draw as to whether savers are winners or losers.

For those providers that have swallowed up other brands in recent years the simplification of their range should be commended, however, not all savers will feel this way, as some provides remove higher paying legacy accounts. Many of these pay more interest than the providers are currently willing to pay, so instead are switching their loyal customers into accounts paying often far poorer and non-competitive rates of interest.

Santander alone has reduced some of its savings range from 80 accounts to just five but 42 of these legacy accounts have seen a reduction to the rate on at least one tier, cutting rates by up to 2.65%. In comparison some rates have seen an increase of up to 1.70%. Leeds Building Society has reduced some of its range from 76 to 12 accounts with cuts as large as 4.55%, compared to increases of up to 1.70%.

Sadly since the introduction of the Funding for Lending Scheme (FLS) savings providers have been slashing rates, especially on their closed, back book accounts, even though the Bank of England base rate has remained unchanged for almost six years.

Savers simply shouldn’t accept this behaviour. Even in the current low interest rate environment, our experience shows that savers can improve their situation, sometimes substantially *, so they shouldn’t sit back and accept their lot. Switch – not only to make the most of the interest, but also to help drive some competition back into the savings market.

Number of accounts cut, increased and unchanged

 

 

 

 

 

 

 

 

 

 

 

 

 Largest rate cuts & increases

Winners & Losers List:

Some accounts have seen an increase, decrease and/or remained the same depending on the balance held, therefore the above figures may not add up to the total accounts being transferred.

Barclays (ISA)

• 11 ISAs transferred to 1
8 accounts cut
3 accounts increased
Largest cut 1.48%
Largest increase 1.38%

Barclays (non ISAs)

• 20 accounts transferred to 1
4 accounts cut
16 accounts increased on at least one or more tiers
Largest rate cut 1.37%
Largest rate increase 0.70%

Dunfermline BS (transferred to Nationwide)

• 89 accounts transferred to 15 equivalent accounts with Nationwide
2 accounts cut
45 accounts increased on at least one or more tiers
41 accounts remained unchanged on at least one or more tiers
Largest cut 0.50%
Largest increase 1.15%

Leeds Building Society

• 76 accounts transferred to 12 (merging some old Mercantile BS accounts)
28 accounts cut on at least one or more tiers
63 increased on at least one or more tiers
32 rate remained unchanged on at least one or more tiers
Largest cut 4.55%
Largest increase 1.70%

Newcastle Building Society

• 18 accounts transferred to 7
11 accounts cut on at least one or more tiers
5 accounts increased on at least one or more tiers
4 rate remained unchanged
Largest cut 0.40%
Largest increase 0.65%

NatWest (ISAs)

• 4 accounts transferred to 1
3 accounts cut on at least one or more tiers
2 accounts increased on at least one or more tiers
Largest cut – 0.74%
Largest increase 0.99%

Natwest (non ISAs) - 2nd Jan 2015

• 14 accounts transferred into 1 (Instant Saver)
6 accounts cut
12 accounts increased on at least one or more tiers
6 accounts remained unchanged on at least one or more tiers
Largest cut 0.74%
Largest increase 0.65%

RBS (ISAs)

• 5 accounts transferred to 1
3 accounts cut on at least one or more tiers
3 accounts increased on at least one or more tiers
Largest cut 1%
Largest increase 1%

RBS (non ISAs) – 2nd Jan 2015

• 17 accounts transferred into 1 (Instant Saver)
4 accounts cut
15 accounts increased on at least one or more tiers
3 accounts remained unchanged on at least one or more tiers
Largest cut 0.89%
Largest increase 0.65%

Santander

• 80 accounts transferred to 5
42 accounts cut on at least one or more tiers
28 accounts increased on at least one or more tiers
43 accounts remained unchanged on at least one or more tiers
Largest rate cut 2.65%
Largest increase 1.70%

Coventry Building Society

• 42 accounts transferred to 12
7 accounts cut on at least one or more tiers
29 accounts increased on at least one or more tiers
39 accounts remained unchanged on at least one more tiers
Largest rate cut 0.15%

Largest rate increase 2.05%

Cheshire BS (transferred to Nationwide)

• 89 accounts transferred to 17 equivalent accounts with Nationwide
0 accounts cut
41 accounts increased on at least one or more tiers
62 accounts remained unchanged on at least one or more tiers
Largest cut n/a
Largest increase 2%

Derbyshire BS (transferred to Nationwide)

• 94 accounts transferred to 14 equivalent accounts with Nationwide
0 accounts cut
20 accounts increased on at least one or more tiers
76 accounts remained unchanged on at least one or more tiers
Largest cut n/a
Largest increase 1%

Halifax – During 2015, date TBC

• 13 accounts transferred to 3
6 accounts cut
4 accounts increased on at least one or more tiers
4 accounts remained unchanged on at least one or more tiers
Largest cut 0.70%
Largest increase 0.15%

Lloyds Bank – During 2015, date TBC

• 19 accounts transferred to 3
5 accounts cut
17 accounts increased on at least one or more tiers
1 account remained unchanged on at least one or more tiers
Largest cut 0.66%
Largest increase 0.25%

 

Notes:
* We’ve increased the interest generated for our Concierge clients’ by an average of over £900 per £100,000 invested or 0.92% gross pa (net of our fee - 0.92% after the deduction of fees.1.22% before fees.)

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