Large numbers of regular monthly savings accounts are restricted, research shows

News - Banking

Written by Ray Clancy

Tuesday, 29 June 2010 08:55

Some 38% of regular monthly savings accounts have restricted availability which means that customers are not able to access the most competitive deals, according to research.

Analysis by independent financial research company Defaqto has found that 30 of the 79 regular monthly savings accounts have restricted availability. And the nine highest interest paying regular monthly savings accounts all have a restriction.

It found that restrictions can be grouped into the following areas where consumers must:
have, or open, a current account; have a specified additional savings account or open linked investment plans; and make deposits from an external source, ie. transfers not permitted from another account held with the same provider.

Additionally there are other restrictions in relation to consumer status where some providers require that savers: be prospective first time buyers; fulfill specific age criteria; have dependent children; live in the local branch area; and open the account in person at a branch.

‘Regular monthly savings accounts have consistently offered some of the highest interest rates available in the savings market at a time when savers have faced an incredibly difficult task trying to get a good rate of return on their money. Consumers need to read the details very carefully to see whether they are likely to be eligible for the highest paying accounts,’ said David Black, Banking Specialist at Defaqto.

Meanwhile another report shows that consumers think financial services are getting more unfair and are regarded as being insufficiently competitive or accessible. Particularly unfair were complex products, such as some insurance products, or those with disproportionate charges, such as store cards, according to the research from The Consumer Panel.

Issues highlighted by the research include concern over the loss of the personalised individual service, personified by ‘old fashioned bank managers’, as well as worries over the treatment of vulnerable customers and the failure to reward loyal customers with products that deliver.

Participants wanted to see financial services customers treated fairly with transparent information, responsible marketing, fair pricing and good ongoing customer care. Sales processes should be low pressure, tailored to individual needs and there should be easy and convenient after sales service, it also found.

‘Financial services are an essential part of life so it is no wonder that consumers regard treating customers fairly with such importance. It is very worrying that the public still believe they are not getting a fair deal and that there is a perception matters are getting worse. The industry needs to do more to increase transparency, giving customers clear and meaningful information, so that they see an improvement in standards of customer service,’ said Adam Phillips, panel chairman.

‘Government must adequately address fairness in financial services as part of its wholesale reorganisation of regulation. The new Consumer Protection and Markets Authority must learn from this research and from the FSA's successes and failures,’ he added.