Some of the UK’s greatest financial providers should hang their heads in shame. Not only are they misleading investors but are bringing an important sector of the economy into disrepute.
Financial service providers should offer products which are fair and clearly understood. Yet too many are enticing savers into accounts whose titles are totally misleading and where their money will languish at derisory rates of interest.
Take the mighty Halifax, now part of Lloyds. Its Ultimate Reward current account does not pay a single penny interest despite its title. Nil interest is also the case with Bank of Scotland’s Silver and Gold accounts, NatWest’s Advantage Gold, RBS’s Royalties Gold and Co-op Bank’s Privilege Premier. Note how many rely on precious metals to sell their current accounts.
Savings accounts fare little better. Just 0.10 per cent is paid by Barclays on E-savings (jumping to 0.12 per cent on £100,000), Nationwide with CashBuilder, NatWest’s First Reserve and at 0.05 per cent with HSBC’s Flexible Saver, Intelligent Finance’s Direct Access Savings and initially with C&G’s Direct Transfer and Darlington’s Instant Access.
Even notice accounts can still mean appalling rates: Leeds’s Capital 7 requires seven days notice but pays 0.05 per cent initially and Yorkshire Bank wants 40 days’ notice for its same named account paying 0.25 per cent up to £50,000.
Aware that older savers often need income rather than growth, specific products target this key sector. Hardly any pay half the rate of inflation.
Many over 50s trust providers to care for their needs but may be appalled to learn the actual rates applied. Yorkshire Building Society’s ‘Access Savers Pensioners’ pays 0.25 per cent, Darlington 0.40 per cent on Emerald, Nationwide 0.55 per cent on Monthly Income 60+ and West Bromwich just 0.05 per cent on its Oak account.
Yet at the current inflation rate, basic rate taxpayers need at least 6.5 per cent just to preserve the value of their money and higher rate taxpayers need to earn 8.67 per cent.
Let’s have more honesty in financial product labelling and a sensible return on savings.