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Govt bank lending scheme blamed for savers' plight

The Government's Funding for Lending scheme, introduced in August 2012, has been blamed for making savers' plight worse as it gave banks access to cheap funding to help mortgage borrowers, making them less reliant on having to attract savers' deposits.

The scheme has been redirected away from households for 2014.The consumer group also found that in February 2008, the average instant-access savings account paid a rate of 4.14%, but that has now plummeted to 0.63%

It's no secret that savers have been hit really hard in recent years, so it's important to be a savvy saver and take advantage of the best deals across the whole market, not just savings accounts.

But banks and building societies should make it easier for savers by giving them clearer information. This includes putting interest rates on all statements, sending annual summaries, and better notification when a bonus rate ends or if better accounts are available.

– Which? executive director Richard Lloyd

. This six year slide would equate to an annual loss of £351 for someone saving £10,000 in an average instant-access savings account.

Instant and cash Isa savers suffer 20 rate cuts

Instant access and cash Isa accounts have suffered around 20 rate cuts a month on average over the last year and a half, consumer group Which? has found.

A traditional piggy bank is smashed open with a hammer. Credit: Anthony Devlin/PA Archive/Press Association Images

The research found savings providers have hacked rates on these accounts 343 times since August 2012, despite the Bank of England base rate being stable during that time at 0.5%

Which? found that rates have even been slashed at the height of "Isa season" - the period around the end of the tax year when providers would normally be expected to ramp up competition to attract people who are looking for somewhere to put their Isa allowance or that for the next tax year.

FCA to look at why savers do not switch accounts

The Financial Conduct Authority chief executive has said a study of introductory rates for savings in banks will enable the FCA to better understand the dynamics that drive the market and the decisions that consumers make.

Financial Conduct Authority chief executive Martin Wheatley. Credit: PA

Martin Wheatley said: "We know that switching rates are low for financial services products and savings accounts are no exception.

"Even when people do switch their accounts, they are twice as likely to go with their existing provider than move to the offering of a competitor."


Bank savings 'teasers' to be reviewed by FCA

The use of introductory rates to tempt savers is to be reviewed by the financial regulator as part of a wider study into the £1 trillion cash savings market.

The Financial Conduct Authority wants to assess whether competition is working in the best interests of consumers, particularly in terms of them getting the best returns possible and information to meets their needs

As well as teaser rates, where introductory deals are offered to new customers, the FCA will want to know how often consumers switch their savings accounts.

Britons 'saving more than ever before'

Savers are putting away the biggest amount since the quarterly survey began in 2004. Credit: Lynne Cameron/PA Wire/Press Association Images

Britons are saving more than ever before, according to new findings.

Treasury-backed savings body NS&I found that savers are putting 8% or £104 of their income aside each month - the first time the sum has broken the £100 barrier.

People aged 25 to 34 are putting aside just over 9% of their incomes each month - or £125 - the highest average figure recorded for this group since 2010.

John Prout, NS&I retail customer director, said: "The research suggests that most age groups in Britain are saving more and this corresponds with an increased use of savings goals from last summer, which can only be an encouraging sign for the future."

'Greater flexibility needed' in pension saving

Greater flexibility may be needed in pension saving, the head of investment propositions at Scottish Widows has said in response to a new study that shows that the next generation may have to start saving at 25 years old to retire by their 70s. Iain McGowan said:

Offering more flexibility that combines the accessibility of an Isa with the tax benefits of a pension could help future generations face up to the twin challenge of saving for short-term financial hurdles like a deposit for a mortgage or a wedding while at the same time setting aside enough for retirement.

– Iain McGowan, head of investment propositions at Scottish Widows

Next generation will 'work longer into their 70s'

Someone born in 2012 could expect to build up £73,000 worth of student debt, according to economist Steve Lucas.

According to a new study, financial pressures from university and housing costs will mean the next generation would have to start saving at the age of 25 to prepare for 30 years of retirement. Mr Lucas said:

In the future, older workers - especially in the professional and business services sector - are likely to stay working longer into their 70s, but the nature of this work will become more flexible and probably more part-time.

Workers in manual or vocational careers are also likely to look to extend their working lives by undertaking a less strenuous, more part-time role.

– Steve Lucas, Economist
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