After Which?’s Great British Savings Scandal campaign revealed that consumers are missing out on a possible £12bn a year stuck in dormant low-interest savings accounts, three of the UK’s largest banks have made commitments to improve the way they communicate interest rates to hard up savers.
Which banks will be making changes to their savings statements?
Royal Bank of Scotland, which has 15 savings accounts paying 0.5% or less in annual interest and 12 paying 0.1% or less, has confirmed that it will print interest rates on all savings account statements by the end of 2011.
Santander has also partly answered the campaign by announcing that, from next year, all of its customers will receive rate brochures, alerting savers to the interest rates they currently receive on their accounts. The Spanish bank has the highest number of low-interest accounts, with 37 accounts paying 0.5% or less and 29 paying 0.1% or less.
This follows the recent decision from Lloyds Banking Group to include interest rates on all Lloyds savings account statements from the beginning of 2011 and Halifax statements from July 2011.
What about the other banks?
Barclays is one of the few major high street banks that already prints interest rates on its statements. Despite this, it is setting a poor example, with 21 of its 27 accounts paying 0.5% or less and 18 paying 0.1% or less.
Nationwide told us that it has committed to notifying its customers when bonus rates periods on their savings accounts end, beginning in November, but stated it would be reviewing the situation regarding interest rate notification on saving account statements along with the rest of the industry.
A promising start, but more action needed
Commenting on the banks’ reaction, James Daley, the editor of Which? Money, said: ‘It’s promising to see some big-name savings providers pledging to improve the information they give to consumers. We want every provider to publish details of interest rates on every statement, as well as in a prominent position on their websites.’
What did the BBA say?
The British Bankers Association (BBA), the trade body that represents the UK’s banks, would not commit to a wholesale shift in communicating interest rates to consumers.
The BBA stated 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.’
The Building Society Association (BSA) stated that a number of societies are already putting interest rate statements on Isas and other accounts but that its members would await the outcome of a regulatory consultation on all savings products before making any commitments.
Of course banks provide a variety of accounts suitable for different consumers’ needs. However, there can be no excuse for omitting interest rates from savings account statements. Armed with the necessary information about the interest rate they’re earning, consumers are more likely to switch their savings to a better deal, leading to a more competitive banking industry.
In a period of low interest rates, with Bank of England base rate at 0.5% since March 2009, a drop in the interest rate paid on your account from 0.3% to 0.1% would not trigger a personal notification of the change, but would lead to a drop of two-thirds in the income from your savings. Many consumers would view this as a material change, but the banking industry does not.
While some providers are taking positive action, others are still dragging their heels, so it’s vital that consumers take matters into their own hands and check the exact rate they’re earning on their savings. That’s why we’ve launched the Which? Savings Booster – just select your provider and account from the dropdowns, tell us how much you’ve got in the account and we’ll calculate for you how much interest you’re earning. We’ll also tell you how much you could be earning by switching to a better savings account or a different type of savings account altogether.
Use the Which? Savings Booster to get the best deal on your savings and cash Isa
Which? research shows the average UK saver is losing out on £322 a year in interest on their savings account and cash Isa.
Our free Savings Booster tool will show you the rate you’re currently earning on your savings and how much extra you could be getting with a Best Rate savings account or cash Isa.
Use the Savings Booster now to find out how much you can save and to set the switching ball rolling.
Take action: Facebook, Which? Conversation and the Which? Savings Surgery
Which? is holding an online Savings Surgery on Thursday 28 October from 12-2pm, where its money experts will be on hand to answer consumers’ savings questions and queries. To get involved, register now and join us on the day at www.which.co.uk/savingssurgery
We also want to hear your views on the paltry savings rates currently being paid to millions of us. Have your say with Which? Conversation and join the Facebook page The Great British Savings Scandal.
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