As banks come under fire for offering “measly” rates to savers, new figures reveal many are leaving hundreds of billions of pounds lying idle in zero-interest accounts.
Some £233bn is being held in zero-interest accounts, according to Bank of England Data analysed by asset management firm Bowmore.
This is up from the total held in such accounts back in November 2021 at the beginning of the Bank of England’s rate-hiking cycle, which last week raised interest rates again to 4.5 per cent, and more than double the amount held £109bn in 2013.
The figures will likely add more weight to calls that banks should be doing more to make sure customers are getting a good deal.
The influential Treasury Select Committee recently expanded its probe into the low savings rates currently on offer beyond the four largest retail banks to include Nationwide, Santander, TSB and Virgin Money.
Keeping savings in a zero-interest account means the value will be eroded by inflation, which remains above 10 per cent despite the Bank’s efforts to bring it down.
A Lloyds Banking Group spokesperson told City A.M. that customers were “proactively moving their money as their needs change”, while Barclays, HSBC and Natwest all said they offer competitive rates to savers.
“We would always encourage people to shop around for the product and interest rate that is suited to their need,” UK Finance, which represents Britain’s banking industry, told City A.M.
However, the Financial Conduct Authority has argued that the incoming Consumer Duty will force firms to demonstrate they are not exploiting customer inertia.
“Savers have got used to a decade and a half where interest rates were effectively zero and there was little point shopping around for a better deal on your savings. Those days are long gone,” Charles Incledon, client director at Bowmore Asset Management, said.
“People need to be aware that savings in a zero-interest account are being eaten away at an alarming rate at the moment,” he added.