Think you’re a savvy saver? Then beware. It’s often those who think they’re getting the best deals who end up with some of the worst.
Take, for example, the thousands of savers who nabbed the top- paying easy-access Isa from Santander last year.
While they’ve enjoyed a rate of 3.2 per cent, if they don’t move their money before the initial one-year deal is up, they will see it drop to a dismal 1.2 per cent.
That is because Santander automatically moves your money from this top account into its Isa Saver, an old account which is no longer on general sale — and which no right-minded saver would willingly choose.
I had high hopes this would change when new Consumer Duty rules were introduced by the Financial Conduct Authority (FCA) last year.
Rate cut: Savers who nabbed the top-paying easy-access Isa from Santander last year enjoyed a rate of 3.2%, but after one year it drops to a dismal 1.2%
I would have thought these regulations, which require financial services companies to ensure good outcomes for customers, would have stopped savings providers from paying terrible rates on old savings accounts no longer on sale while there are better rates on new ones.
Banks and building societies were given 12 months to apply Consumer Duty rules to their old savings accounts. But I don’t hold out much hope that rates will improve greatly by July.
Yesterday, the FCA launched a £600,000 campaign to encourage savers to shop arounnd — placing responsbility firmly on savers to get a good deal.
And when I asked the FCA if it would require savings providers to improve rates on old accounts, it said no.
It pointed me to a hidden section of its rule book, catchily titled Finalised Guidance For Firms On Consumer Duty.
In (FG22/5) paragraph 3.22, it says: ‘We do not expect firms to move all existing customers on to the latest version of a contract, or to standardise pricing models for all legacy business.
Firms should review each product or service on its own merits and address any issues they find.
For example, we do not expect all legacy deposit accounts to offer the same interest rate; instead, firms should check that the interest rate provides fair value in the context of each product.’
The FCA says it isn’t a price regulator, so it won’t tell providers what they should pay savers.
Some big banks have been working to comply with the new rules — but still pay lousy rates. For example, NatWest has moved all its savers in its old Instant Saver account into its Flexible Saver easy-access account, which is currently on sale.
But, you still earn the same low rate, starting at 1.75 per cent on balances up to £25,000.
The best easy-access accounts pay around 5 per cent. Barclays has no old easy-access accounts, but pays a lousy rate at 1.65 per cent at best on its Everyday Saver account.
Santander, Halifax and Lloyds still offer new accounts with top rates that only last for a year. Then your money is dumped in an old account with dreadful rates.
Halifax has a Bonus Saver, an ordinary easy-access account, which pays 4.1 per cent if you make no more than three withdrawals in a year.
But, after 12 months, you end up in its off-sale Instant Saver, which pays 1.45 per cent.
Halifax has other closed accounts paying even less: just 1.3 per cent in the misnamed Bonus Gold and Extra Income Saver.
Lloyds offers a flagship 4 per cent Club Lloyds Advantage Saver for a year, before moving you to its closed Standard Saver, where rates start at 1.4 per cent.
It also has closed accounts such as its Flexible Saver, Online Saver, Platinum Saver and Premier Saver, paying between 1.4 per cent and 1.9 per cent depending on your balance.
Virgin Money’s old E-Saver and Easy Access E-Saver accounts pay a disgraceful 0.25 per cent. Its closed Double Take account, which allowed two withdrawals a year, now pays just 0.35 per cent.
Its newer Defined Access E-Saver, which allows you to make three withdrawals a year, pays 5.11 per cent on Issue 21. But some older issues of the same account pay just 1.75 per cent.
sy.morris@dailymail.co.uk
Check the best cash Isa rates in our savings tables
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