Only two banks in the UK offer sufficient transparency to savers, report indicates

News - Banking

Written by Ray Clancy

Wednesday, 27 October 2010 09:26

Lloyds TSB and Halifax are leading the banking industry in the UK in terms of transparency for savers, a new report reveals.

But savers are missing out on £12 billion a year because most banks are keeping them in the dark about miserly interest rates, according to new research by consumer champion Which?

Almost half of the 1,200 plus savings accounts available in the UK pay 0.5% interest or less and one in four pays 0.1% or less, just £1 a year for every £1,000 saved, the report shows.

Which? even found two accounts, Ulster Bank’s Easy Access Savings Account and Newcastle Building Society’s Nova Plus Issue 3 Account, that pays just 0.01%, an annual return of 10 pence for every £1,000 saved.

Banks aren’t being upfront about these poor returns, with few even showing interest rates anywhere on regular statements or telling customers about better accounts.

‘Banks are depriving British savers of £12 billion a year by keeping us in the dark about the pitiful interest paid on hundreds of savings accounts,’ said Which? chief executive, Peter Vicary-Smith.

He is urging people to do something about it. ‘Whilst we pressure the banks to be more upfront about their rates, people can take action and potentially add hundreds of pounds a year to their savings by moving their money to a better account,’ he said.

The British Bankers’ Association said that banks provide a variety of savings products to suit people’s needs and have no interest in keeping customers in the dark about the products they use.

‘Information is readily available in branches, online and from a variety of other sources, including newspaper best buy tables and comparison websites and customers will also be automatically notified if there are changes resulting in materially lower rates so they can switch their funds,’ it said.

‘Savings’ rates vary depending on the amount customers have to save and the time they can afford to leave the cash untouched. Customers with money to invest often look to a cocktail of saving products to meet their savings needs, balancing longer term, higher interest products with instant access accounts which may offer other facilities, such as bill payments. As with any product or service it always pays to shop around for the deal which is best for you,’ it added.

Lloyds TSB and the Halifax have already taken steps to ensure current interest rate information is clearly visible online and on paper statements. They both offer existing savings customers access to all savings deals ensuring that no barriers exist for those wishing to switch to a better paying savings account and ensure that an online calculator is available to help customers work out exactly how much interest they can earn in different accounts.

And from the beginning of next year, Lloyds TSB customers will see their savings rates printed on their statements so they can see exactly what their money is earning. Halifax and Bank of Scotland savings customers will be able to view their interest rates on statements as well as online from July 2011 onwards.

Lloyds TSB customers already have the ability to calculate which savings account is right for them by comparing online the returns they would receive depending on their lump sum or monthly investment. A similar calculator will be available for Halifax and Bank of Scotland customers from the beginning of next year.