Have Banks spotted a way to unfairly not raise the interest rate on customers' savings accounts?

MalC4

Has anyone else noticed that there appears to be a growing pattern of unfair/unscrupulous behaviour by some banks (etc) when it comes to not increasing the interest rates on the savings account of their customers, but instead bringing out a new product (really the same product under a new Issue number)? 

It feels like the banks are trying to adopt an unfair system by taking advantage of the trust of their loyal customers. Take for example Easy Access savings accounts. Banks state that the interest rate is variable, i.e. it can go up or down. However, whilst I'd imagine that if the BoE were to start decreasing interest rates then the banks would rapidly follow suit and yet, with the increase in BoE rate there seems less and less chance of an increase in rate offered on these variable accounts (let alone rapid).

I have noticed this pattern of behaviour over the past year and it appears to be heading towards quite systemic behaviour. More and more intuitions appear to be adopting this approach. It is my understanding that the government has told the banking sector that rapidly withdrawing mortgage products in order to relaunch them at higher interest rates whilst, on the other hand, sluggishly raising the interest rates for savers is not acceptable and they need treat savers fairly. It is my suspicion that the banks have found a way to circumnavigate raising interest rates on savings accounts by quietly ignoring loyal customers whilst bringing out, what is essentially the same product with a better rate. This is an abuse of trust. When a bank says the rate can go up or down we expect them to be honest and offer us the same rates as new customers. We do not expect to have to keep checking back to see if our bank has brought out a better rate product to attract new customers and we do not expect to incur the hassle of regularly moving money from one account to another within the same institution (which only really works for easy access accounts. We are over a barrel and locked in with notice accounts). We do expect fair and reasonable treatment.

I don't know how to contact Martin and his MSE team, but if they're reading this, I hope this would be something that they would find interesting to look into - fingers crossed

wmb194

MalC4 said:

Has anyone else noticed that there appears to be a growing pattern of unfair/unscrupulous behaviour by some banks (etc) when it comes to not increasing the interest rates on the savings account of their customers, but instead bringing out a new product (really the same product under a new Issue number)? 

It feels like the banks are trying to adopt an unfair system by taking advantage of the trust of their loyal customers. Take for example Easy Access savings accounts. Banks state that the interest rate is variable, i.e. it can go up or down. However, whilst I'd imagine that if the BoE were to start decreasing interest rates then the banks would rapidly follow suit and yet, with the increase in BoE rate there seems less and less chance of an increase in rate offered on these variable accounts (let alone rapid).

I have noticed this pattern of behaviour over the past year and it appears to be heading towards quite systemic behaviour. More and more intuitions appear to be adopting this approach. It is my understanding that the government has told the banking sector that rapidly withdrawing mortgage products in order to relaunch them at higher interest rates whilst, on the other hand, sluggishly raising the interest rates for savers is not acceptable and they need treat savers fairly. It is my suspicion that the banks have found a way to circumnavigate raising interest rates on savings accounts by quietly ignoring loyal customers whilst bringing out, what is essentially the same product with a better rate. This is an abuse of trust. When a bank says the rate can go up or down we expect them to be honest and offer us the same rates as new customers. We do not expect to have to keep checking back to see if our bank has brought out a better rate product to attract new customers and we do not expect to incur the hassle of regularly moving money from one account to another within the same institution (which only really works for easy access accounts. We are over a barrel and locked in with notice accounts). We do expect fair and reasonable treatment.

I don't know how to contact Martin and his MSE team, but if they're reading this, I hope this would be something that they would find interesting to look into - fingers crossed

It's nothing new and to my certain knowledge has been going on for decades. Your first mistake is to be, "loyal." You've always needed to be as sharp as they are. It isn't just banks, btw. Building Societies do the same.

Edit: And if you sign-up to e.g., Moneyfacts' regular savings account update e-mails it doesn't take much effort to keep on top of the market.

searching4bestrates

MalC4 said:

Has anyone else noticed that there appears to be a growing pattern of unfair/unscrupulous behaviour by some banks (etc) when it comes to not increasing the interest rates on the savings account of their customers, but instead bringing out a new product (really the same product under a new Issue number)? 

It feels like the banks are trying to adopt an unfair system by taking advantage of the trust of their loyal customers. Take for example Easy Access savings accounts. Banks state that the interest rate is variable, i.e. it can go up or down. However, whilst I'd imagine that if the BoE were to start decreasing interest rates then the banks would rapidly follow suit and yet, with the increase in BoE rate there seems less and less chance of an increase in rate offered on these variable accounts (let alone rapid).

I have noticed this pattern of behaviour over the past year and it appears to be heading towards quite systemic behaviour. More and more intuitions appear to be adopting this approach. It is my understanding that the government has told the banking sector that rapidly withdrawing mortgage products in order to relaunch them at higher interest rates whilst, on the other hand, sluggishly raising the interest rates for savers is not acceptable and they need treat savers fairly. It is my suspicion that the banks have found a way to circumnavigate raising interest rates on savings accounts by quietly ignoring loyal customers whilst bringing out, what is essentially the same product with a better rate. This is an abuse of trust. When a bank says the rate can go up or down we expect them to be honest and offer us the same rates as new customers. We do not expect to have to keep checking back to see if our bank has brought out a better rate product to attract new customers and we do not expect to incur the hassle of regularly moving money from one account to another within the same institution (which only really works for easy access accounts. We are over a barrel and locked in with notice accounts). We do expect fair and reasonable treatment.

I don't know how to contact Martin and his MSE team, but if they're reading this, I hope this would be something that they would find interesting to look into - fingers crossed

I get what you mean, but customer "loyalty" and banking have generally always been mutually exclusive terms.

I personally am regularly checking all banks and building societies (and MSE and this forum of course which provides valuable real-time update) and moving my savings around as I see fit to ensure I am obtaining the best rates. I don't mind doing this. Banks such as Shawbrook do make it easy to "upgrade" your account if/when they bring out a new issue. I can't comment on the other banks that bring out new issues regularly, but I haven't seen this generally be a big issue.

Inertia always leads to the individual being left behind - savings accounts, insurance products etc.! The providers all rely on customer inertia.

Regarding fixed rates, there is always a chance that the bank/building society will then bring out a better fix, especially if the markets are factoring in an interest rate rise. That's the gamble we all need to take when taking out a fixed product. Conversely, there may be a time when you fix and rates (rapidly?!) fall and the fix is above base rate. This happened on the other side of the coin for many people that fixed their mortgages in 2021...

sheslookinhot

Ford Money do increase their savings rates for customers, but do not appear in moneyfacts easy access saver. ( would be 4th choice on interest rate).

Ayr_Rage

Imagine you are running the bank.

How do you pay extra interest to everyone on older products when you have factored the rate they have in your accounts ?

You'd have to raise lending rates to cover it.

When current rates fall below fixes are you going to complain ?

Taking a fix on anything has always been a gamble, be it savings or energy but you have to accept your fate in a changing world.

Loyalty to any bank is foolhardy.

jaypers

Banks are a business. They are there to make money.  Customers generally need to be more savvy and thanks to the likes of Martin Lewis plus forums like this, the customer is starting to fight back. 

ColdIron

Starting? I've been around this site for over 10 years and there are many that have been around longer than me

Andreg

I vaguely remember about 15-20 years ago the regulator brought out new rules that effectively banned the practice of  quietly cutting rates on existing accounts while bringing out new accounts with a better interest rate.  Maybe the rules are still in existence, but perhaps they don't cover keeping the rates on existing accounts the same in a rising interest rate environment.  Looks like something the regulator should review.

dunstonh

Has anyone else noticed that there appears to be a growing pattern of unfair/unscrupulous behaviour by some banks (etc) when it comes to not increasing the interest rates on the savings account of their customers, but instead bringing out a new product (really the same product under a new Issue number)? 

No.  Fixed term deposits have always worked on tranches.     The rate given is dictated not by interest rates but funding from other sources.  Such as swap rates, money markets and offsetting against borrowing.

In respect of no-notice accounts, then these two tend to get replaced over the years and those on older versions get neglected.  Its been that way for as many of us can remember.      If they were only allowed to offer one savings account and everyone got the same rate, then the rate would be lower.

I don't know how to contact Martin and his MSE team, but if they're reading this, I hope this would be something that they would find interesting to look into - fingers crossed 

Martin doesn't post here since he sold the site.

friolento

MalC4 said:

Has anyone else noticed that there appears to be a growing pattern of unfair/unscrupulous behaviour by some banks (etc) when it comes to not increasing the interest rates on the savings account of their customers, but instead bringing out a new product (really the same product under a new Issue number)? 

It feels like the banks are trying to adopt an unfair system by taking advantage of the trust of their loyal customers. Take for example Easy Access savings accounts. Banks state that the interest rate is variable, i.e. it can go up or down. However, whilst I'd imagine that if the BoE were to start decreasing interest rates then the banks would rapidly follow suit and yet, with the increase in BoE rate there seems less and less chance of an increase in rate offered on these variable accounts (let alone rapid).

I have noticed this pattern of behaviour over the past year and it appears to be heading towards quite systemic behaviour. More and more intuitions appear to be adopting this approach. It is my understanding that the government has told the banking sector that rapidly withdrawing mortgage products in order to relaunch them at higher interest rates whilst, on the other hand, sluggishly raising the interest rates for savers is not acceptable and they need treat savers fairly. It is my suspicion that the banks have found a way to circumnavigate raising interest rates on savings accounts by quietly ignoring loyal customers whilst bringing out, what is essentially the same product with a better rate. This is an abuse of trust. When a bank says the rate can go up or down we expect them to be honest and offer us the same rates as new customers. We do not expect to have to keep checking back to see if our bank has brought out a better rate product to attract new customers and we do not expect to incur the hassle of regularly moving money from one account to another within the same institution (which only really works for easy access accounts. We are over a barrel and locked in with notice accounts). We do expect fair and reasonable treatment.

I don't know how to contact Martin and his MSE team, but if they're reading this, I hope this would be something that they would find interesting to look into - fingers crossed

If banks would raise the rates they py to existing customers they would have to

1. raise the interest rates they charge for existing loans
2. lower the rate they can afford to pay to everyone

You can argue this is acceptable but you can't ignore this from your request for fair and reasonable treatment.

Bridlington1

MalC4 said:

We do not expect to have to keep checking back to see if our bank has brought out a better rate product to attract new customers and we do not expect to incur the hassle of regularly moving money from one account to another within the same institution

If you are not going to check if better rates are available why you should you expect the bank to automatically give you higher rates on your savings?

(which only really works for easy access accounts. We are over a barrel and locked in with notice accounts). 

Similar to fixed rates in the sense that you are taking a risk that the rate on your notice account will remain competitive for the time your money is in the account.

We do expect fair and reasonable treatment.

I think it's quite fair and reasonable as it is. At present those who actively look for better savings rates are rewarded by earning a higher rate of interest than those who can't be bothered to review their savings options every now and then.