Lib Dems back MSE Savers' Rights campaign
The Liberal Democrats have thrown their weight behind MoneySavingExpert.com’s campaign to force banks and building societies to publish savings rates on customer statements
Shadow Chancellor and Lib Dems deputy leader Vince Cable has tabled an Early Day Motion (EDM) in Parliament calling on providers to clearly indicate the current interest rate on savings accounts. It then goes on to support the full MoneySavingExpert.com ‘savings summary box’ campaign concept. Last month, we launched a petition on the Number 10 website which has already had nearly 23,000 signatures, making it the third-largest there.
Providers hide interest as rates plummet
Over the past six months, the Bank of England base rate has plummeted from 5% in October 2008 to a current historic low of 0.5%, which has decimated many savers’ earnings. In addition, because banks and building societies do not clearly publish their rates on savings statements, many have no idea what they’re now earning on their cash.
Martin Lewis, creator of MoneySavingExpert.com, says: "Month-by-month, savers have been slapped across the face by a succession of base rate cuts. Yet click onto your account, or open the statement envelope, and does it indicate what interest rate you’re now earning? Not on your nelly. At best, most provide an overloaded list of accounts with similar or identical names.
"Yet there’s no technological barrier here. If they can tell us what’s in our account, they can tell us the rate. It can only be a downright dirty attempt to create a fog to stop people finding out how pitiful their interest is. I hope everyone who wants to see an end to this underhand practice signs the petition and urges their MP, whatever the party, to support the EDM."
It's about savings safety too
The problems with savings accounts do not only concern the lack of information on interest rates. Many savers will be completely unaware what protection they have if their provider goes bust. Usually, you are protected for the first £50,000 per person, per financial institution, but only if your bank or building society is fully registered in the UK with the FSA.
Martin also demands the summary box clearly states what protection savers really have. He says: “Currently, savers with the Post Office may think they’re fully protected, but actually they’re completely reliant on the Irish compensation system, not the UK government system. This is outrageous, and worse still, many are not told when they open accounts, yet a summary box would tell them this and let them have the choice.”
The other problem is what counts as a financial institution. Two different savings accounts may be part of the same institution which means, in that case, you’d only have one lot of £50,000 protected.
The Lib Dems' Motion
Cable says in the EDM: “I condemn the fact most savings statements do not clearly indicate the correct current interest rate. Bank of England interest rates have changed dramatically over the last six months, leaving many savers confused about the level of interest they are receiving.
“I call on the Financial Services Authority (FSA) to give savers the same protection as credit card holders by mandating savings account providers to include a summary box in every online and paper statement comprising the current bespoke interest rate, bonus rates (including expiry date) and penalties for withdrawal.
“Also, to lay out what institution the account is linked to for the purposes of the Financial Services Compensation Scheme. These simple steps will greatly improve the transparency of many accounts, enabling hard-pressed savers to ensure they are maximising their savings.”
Martin says: "It's great to see politicians getting involved. And not much surprise that it is Vince Cable, one of the few who sits on the green benches and actually seems to understand real money issues.
"It's just my hope that between all of us, the message travels up to the PM's ears and he realises that this simple, cheap change could have a massive impact on a nation of almost disenfranchised savers."
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