High Street Banks Deny Best Savings Rates to Customers Who Manage Accounts in Branch

Strategic Insights -

High Street banks and building societies, including NatWest and Virgin Money, are reserving the best savings rates for customers who manage their accounts online, rather than in branch. This practice could cost in-branch customers thousands of pounds in lost interest. According to experts, the Financial Conduct Authority's (FCA) new Consumer Duty rules require banks to provide fair treatment to all customers, including those with characteristics of vulnerability. However, the FCA has yet to take action against banks that have breached these rules.

Key Takeaways:

  • Over 1,100 bank branches have been closed or put on notice since the start of last year, forcing customers to rely on online banking.
  • High Street banks, including NatWest and Virgin Money, are offering better savings rates to customers who manage their accounts online, rather than in branch.
  • NatWest's digital regular saver account pays 6.17% interest, while its branch-based account pays just 1.75%.
  • The Post Office pays 4.4% interest on its easy-access Isa online, but only 3.1% on its in-branch equivalent.
  • More than 1,000 customers who bank in person are being deprived of their right to access the best savings rates.
  • The new Consumer Duty rules require banks to treat all customers fairly, regardless of whether they bank online or in branch.
  • The FCA has yet to issue a penalty to a firm that has breached the Consumer Duty rules.
  • Experts warn that denying in-branch customers the best savings rates is contrary to the standard of care set out in the Consumer Duty rules.
  • Liberal Democrat MP Richard Foord calls for a crackdown on banks that do not give all customers a fair deal.
  • NatWest is excluding customers who would prefer not to manage their money online by requiring them to bring their own digital device to create an account.

Statistics:

  • 6.17% is the interest rate paid by NatWest's digital regular saver account.
  • 1.75% is the interest rate paid by NatWest's branch-based flexible saver account.
  • 4.4% is the interest rate paid by the Post Office on its easy-access Isa online.
  • 3.1% is the interest rate paid by the Post Office on its in-branch easy-access Isa.
  • 60% of over-65s do not bank online, according to Age UK.
  • 1,100 bank branches have been closed or put on notice since the start of last year.

Sources:

  • "Banks' cynical move to kick savers offline", The Mail on Sunday, (date not provided)
  • "High Street banks 'deny best savings rates to customers who bank in branch'", The Daily Mail, (date not provided)
  • "FCA sets out new rules for banks and insurers", Financial Conduct Authority, (date not provided)
  • "Consumer Duty: Treating customers fairly", Financial Conduct Authority, (date not provided)