Why aren't savers seeing the benefit of rate rises?
There is growing concern that many savings account holders are being taken for a ride by their banks in regard to interest rates.
By David Field.
There is growing concern that many savings account holders are being taken for a ride by their banks in regard to interest rates. If your looking to search for the best interest rates, UK Net Guide's Saving's Search lists all the major providers and banks to compare interest rates!
However, a large number of major banks are failing to pass on these interest rate rises to their customers, giving rise to calls for an official enquiry, according to the Sunday Times.
The publication claims that the majority of leading banks revealed their new savings rates last week, some three weeks after the Bank of England has raised the base rate.
Worse still are claims that banks such as ING Direct, Alliance & Leicester and Halifax have failed to increase their interest savings rates on their flagship accounts, leaving thousands of customers missing out on potential gains.
Now consumer groups and politicians alike are calling for reform of the banking code, which sets out best practice guidelines for banks but has no official power.
Vincent Cable, the shadow chancellor for the Liberal Democrats, told the publication: "We need a permanent regulator to oversee banking operations.
"The banks are taking advantage of customer inertia — they say they are engaged in a ferocious battle, but it is very difficult for customers to keep track of what is happening to their accounts."
Savings rates among the UK's main banks have risen by an average of 0.2 per cent since January, 0.05 per cent below the base rate increase, while mortgage rates have grown by 0.26 per cent.
In addition, lenders have been quick to implement changes to their interest rates in the aftermath of the rate rises, so much so that consumers are having a hard job of finding a loan with a rate below six per cent.
Michelle Slade, personal finance analyst at moneyfacts.co.uk, said: "Although personal loan rates are not directly impacted by a base rate rise, since the last rate hike in January, moneyfacts.co.uk has seen eight lenders increase their unsecured personal loan rates by as much as eight per cent for some tiers."
According to figures from the company, just four lenders now offer interest rates below six per cent for loans of £5,000 over a three-year period.
More than 40 per cent of companies are thought to be charging in excess of eight per cent and 16 per cent charge more than ten per cent interest.
