July 22 2017 Latest news:

Its crucial to keep track of your savings rates

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Consumer group Which? has published research suggesting that only a third of the big players guarantee to inform us personally about changes to rates.

The study found that while four of the 12 banks or building societies featured in the investigation contacted their customers directly, most savings providers relied on newspaper adverts or people popping into branches to announce smaller rate changes.

Of the major brands investigated by Which?, only Cheltenham & Gloucester, First Direct, Co-op and ING Direct promised to personally notify their customers – by e-mail or letter – of all cuts in interest rates.

The other major banks guaranteed to personally notify customers only if rates were cut by more than 0.25pc, or if a series of smaller cuts added up to more than 0.5pc over a year.

However, the banks have hit back, branding the Which? criticism as “groundless”.

In a strongly-worded rebuttal, the British Bankers’ Association said: “Banks will always inform customers of any significant downward movement in interest rates on their accounts. This is stipulated by the Financial Services Authority in its banking regulations.

“The banking industry has further clarified this, ensuring that [any] customer will be personally notified in advance of any downward move of more than 0.25pc if the savings account has a balance of £500 or more.”

The BBA added: “In addition, customers have round-the-clock access to the interest rates on their accounts, either at the branch or via the phone or web. All a customer needs to do is ask.

“[The] claim that customers are being kept in the dark is groundless. If all customers were to be notified of all changes to their interest rates – as Which? has suggested – the costs to the environment, to the economy, to banks and ultimately to customers would be considerable.”

These sorts of spats between the banking industry and consumer groups happen from time to time. Whether or not the banks think the criticism is fair, it is perhaps no bad thing if they are kept on their toes thanks to scrutiny by these watchdogs.

As is often the case, the truth is probably somewhere in the middle. Which? is absolutely right to highlight the different policies operated by the banks. Some are indeed more open than others. But the idea that savings providers somehow hide any rate changes seems a tad over the top – after all, there is nothing to stop us checking our account from time to time.

Savers have been clobbered by the poor rates that have been on offer since the economic downturn began a couple of years ago. In fact, you’ve got to go a long way to find an account that actually gives any return at all once the impact of inflation is brought into the equation.

So the best thing we can all do is keep an eye on what returns we are getting. By doing that, it shouldn’t matter how often the banks decide to write to us.


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