Banks may have to give loyal customers better interest rates - MSE News

Banks may be forced to pay loyal savers better interest rates, after the regulator raised concerns that long-standing customers are losing out...
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'Banks may have to give loyal customers better interest rates'
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  • TheShape
    TheShape Posts: 1,779 Forumite
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    That's handy. I'm a loyal customer of nearly all of the banks.
  • Paul_DNAP
    Paul_DNAP Posts: 751 Forumite
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    I think (hope) most people on this forum are savvy enough to regularly ditch & switch poor accounts after the initial attractive rates have ended.
    (Although I could be wrong, I often am.)
  • Malthusian
    Malthusian Posts: 10,931 Forumite
    First Anniversary First Post Name Dropper Photogenic
    It hopes to gather feedback on how much harm this is causing consumers, and on its preferred remedy, which is each bank introducing a basic savings rate on easy-access savings and another on cash ISAs once they have been open for a certain amount of time.
    Fair enough. Malthusian Bank hereby announces that its basic savings rate will be 0.1% per annum, in line with the bank base rate minus the substantial costs of regulation including paying for pointless discussion papers like this one.

    If any of our customers don't like that, they can switch to our exciting new bank account paying 1% (inclusive of 0.9% bonus for twelve months).
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
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    Efforts to encourage customers to switch...

    ...should be as far as their interference in such matters - relating to this - go. Anything more and they're fixing symptoms, not problems.

    Telling banks they must pay a minimum of X% on accounts is so totally going to have unintended (or maybe intended, given the below) consequences which will require further interference (sorry - intervention) by the FCA.

    It seems that they've fixed all the other problems like
    - push-payment fraud,
    - being able to confirm the account details, you've just entered, do actually belong to the person you're about to pay for the first time
    - stopping cold-calling for financial products, especially pension reviews/liberation, from all countries

    and are looking for make-work exercises to make it look like they're being effective...
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • JuicyJesus
    JuicyJesus Posts: 3,830 Forumite
    First Anniversary Combo Breaker First Post
    Sorry, am I missing something here? Surely something like this encourages customers to stay with their current bank, rather than promoting competition?

    The FCA does seem to have a thoroughly weird approach to competition, I must say. Not enough people consider it worthwhile to switch banks despite copious offers of free money to do so, clearly it's not easy enough rather than the consumers not actually caring. People don't constantly move their savings to accounts with better rates, it's clearly banks taking advantage of inertia rather than consumers not being bothered.

    It's very, very odd.
    urs sinserly,
    ~~joosy jeezus~~
  • Seems to me if you don't have the intelligence or inclination to switch a savings account that has a 0.05% interest rate then you really don't deserve any better anyway.
  • Paul_Herring
    Paul_Herring Posts: 7,481 Forumite
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    clearly it's not easy enough rather than the consumers not actually caring

    While I know that was tongue in cheek, the reason I don't bother is it's not usually financially worth the time I'd spend before, during, and after to manage the account.

    Take, for example, This Is Money's headline grabbing "Use this simple trick to get an inflation busting one-year fixed-rate savings account paying 7% on £1k with FSCS protection" a week or so back.

    It's, for starters, misleading. It's only 7% if you squint and tilt your head in just the right way.

    What it actually is, is a £50 bonus.

    They work out it's 7% if you save £1000 into a 2% 1-year savings account (thus, £50+£20 = £70 on £1000)

    If you wanted to save £10,000, you wouldn't get £700 interest, you'd get £250. Or 2.5%

    My problems with taking up this particular offer were (problems apply, mutatis mutandis, to other offers):
    1) I had to sign up to another provider.
    1b) Who didn't like my gmail address using the + lable.
    1c) So off to SneakEmail to generate another one-off address*

    There's half hour wasted.

    2) Having set up the account, with them, I'd have to also set up another account in the software I use to keep track of such things

    Round up to 10 minutes

    3) And update/check at least once a month. Hmm - LastPass doesn't fill out the form...

    5 mins per month - one hour.

    4) Closing the account

    God knows.

    So, for roughly 1-2 hours, I get £50 plus 2% of whatever I'd save.

    Or I could use (e.g.) Funding Circle and get around 7% (proper, or more) to begin with for no extra effort or time on my part. Even 5% with RateSetter beats this.

    If I can't be bothered with "7%" on that basis, it simply isn't worth my time to chase 0.1% by changing bank savings or current accounts with their myriad conditions, clauses and whatever other obstacles they put up in order to not actually give you the headline rate.


    * MSE don't accept these email addresses.
    Conjugating the verb 'to be":
    -o I am humble -o You are attention seeking -o She is Nadine Dorries
  • badger09
    badger09 Posts: 11,201 Forumite
    First Post First Anniversary Name Dropper
    Banks may be forced to pay [STRIKE]loyal[/STRIKE] lazy savers better interest rates, after the regulator raised concerns that long-standing customers are losing out...
    Read the full story:

    Fixed that for you:cool:
  • harz99
    harz99 Posts: 3,636 Forumite
    Name Dropper First Post First Anniversary Home Insurance Hacker!
    I would prefer to see a guarantee that existing savers in easy access accounts, and those existing savers renewing fixed term accounts always be offered the best available rate for the bank/building society offers for those products at the time. So on-going for easy access and at time of initial roll over for fixed term.
  • ValiantSon
    ValiantSon Posts: 2,586 Forumite
    The FCA once again demonstrate that they don't understand how competition within a market works.

    There is competition, because the banks offer competing rates on accounts. The fact that these are then beaten (although not always) by some other rate is simply evidence of competition existing. People are free to move their savings.

    What this proposal will actually do is reinforce the foolish behaviour of leaving money in an account without looking for alternatives because people now think they have a guaranteed loyalty rate.

    Please, FCA, stick to dealing with things that actually compromise customers.
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