EDITORIAL COMMENT: Scandal of skimpy savings rates (From South Wales Argus)

EDITORIAL COMMENT: Scandal of skimpy savings rates

9:28am Tuesday 9th February 2010

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WE hear a great deal of criticism, quite rightly, of the banks in this country as we stagger towards an uncertain financial future brought on in many ways by the recklessness of their managements.

Politicians posture on a daily basis in the run-up to the General Election as to what they will do to curb the excesses of the bankers, especially the obscene bonuses of the top tier, yet they say next to nothing about abuses that are still rampant.

One of these is the scandalous level of ISA interest rates.

ISAs (individual savings accounts) are designed to encourage saving by offering tax-free interest to those who take the trouble.

We are all allowed to save up to £3,600 (or £5100 from April) and pay no tax on their interest within an ISA.

Yet many banks, including the state-owned ones, are getting away with paying virtually no interest on accounts that have gone past their short-term initial offers.

The Financial Times estimates that more than one million savers are earning 0.1per cent or less on their ISA savings.

The Cheltenham and Gloucester (part of Lloyds), for instance, pays 0.05 per cent annually, which produces only £1.80 a year on savings of £3,600. This is an absolute disgrace and an issue which warrants much more disclosure.

Many older savers, including many of our readers, we suspect, are suffering this abuse unaware of the fact that their interest rates have plummeted since they first invested their cash.

This is because the banks are not obliged to inform them of reductions in savings rates.

Yet many rely on their savings to see them through their old age.

These people are not the ones who have brought the country to its knees, but they are the ones who seem to be paying the highest price.

We have not heard a single politician, from any party, denounce this sharp practice, in which the banks are allowed to play with our money and give nothing in return.

Meanwhile those who need to borrow money may well be charged the highest rates seen in 12 years.

Our question is simple. Who will back the small man on this one?

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