N&P building society claims to be among the beneficiaries. "The recent banking scandals have prompted many customers of the big high street names to review their current account arrangements," said Ewan Edwards, head of current accounts at N&P. "A high proportion of the society's new current account customers have switched from Barclays and NatWest and we believe this is clearly in reaction to the recent financial scandals and criticism of the big banks."
But I'd like to highlight another banking failure. Our national piggy bank, NS&I is also contributing to the suffering of savers. Often recommended as the safest home for your money, as it is backed 100 per cent by HM Treasury, this institution is offering a dreadful range of savings accounts.
The range itself has considerably slimmed down over the past couple of years. It has now been almost a year since the government-backed savings institution has issued Index-linked Savings Certificates, which paid tax-free returns for lump sums above the retail prices index measure of inflation (investors who managed to bag one before they were withdrawn can renew them on maturity, albeit at a lesser inflation-plus rate). (Read Another blow for savers.)
Other products no longer in the portfolio include Fixed Interest Savings Certificates, which paid fixed tax-free returns on lump sums.
Yes, there are some minor successes. A woman from Cheshire is now a millionaire, having won the premium bond jackpot this week. But for the majority of NS&I's premium bond customers who haven't had her luck, the deal looks very poor indeed. The total prize fund has fallen to just 1.5 per cent, with the odds of winning per £1 unit at 24,000 to 1. Compare the prize fund rate to several instant-access accounts on the market today offering 2.5 per cent and it stinks. As we've pointed out on several occasions, you should only buy premium bonds if you want a fun flutter on winning. But longstanding bondholders should reassess their holdings because there is much less 'fun' on offer.
There is worse elsewhere in NS&I's portfolio of products. The Direct ISA offers a tax-free 2.5 per cent a year, well below the top cash Isas on the market (for example, Santander's Direct Isa offers 3.30 per cent AER).
NS&I's Direct Saver offers even less at 1.5 per cent a year taxable, while the laughably named Investment Account operated by post offers just 0.75 per cent.
I asked NS&I to defend these dreadful rates and they gave me the following statement: "We price our products to balance the interests of our savers (offering a fair interest rate), taxpayers (delivering cost-effective debt financing to the government) and the stability of the broader financial services sector (acting responsibly and transparently). Savers invest with NS&I for a number of reasons, including the interest rate payable on our products, but also to benefit from our 100 per cent HM Treasury guarantee and our range of tax-free products, including Premium Bonds."
I'm sure this is cost-effective debt financing to the government, but these aren't what I'd call 'fair interest rates' for savers. While I wouldn't expect NS&I to be the market leader, its rates should be further up the savings tables, giving savers an equal share of the balance of interests outlined here.
