Barclays takes on the zombies

It’s hard not to believe that things really are changing at Barclays. I wrote a few months ago about the impressive work it has done on its banking terms and conditions. And this week, it made another bold move – unveiling plans to shut down all its cash Isas that are closed to new business (so-called Zombie accounts), and to move the money left in the old accounts to a new instant cash Isa paying a decent rate of just under 1.5%.

It’s important to say that in the short-run, this is by no means good for all of Barclays’ existing cash ISA customers. Around two-thirds of those who are affected will find that their savings end up in an account that pays less than they were getting before. But a third of customers will see their rate increase or stay the same. And importantly, the customers who are losing out are being given plenty of notice to move their money elsewhere.

So what's the good news?

If you’re wondering where the good news is in all of this – it’s all about simplicity and transparency. Today, when you open a cash ISA, most banks offer you a great rate for a limited period, after which they close the account, cut the rate and hope you’ll forget to move your money elsewhere. And millions of people do forget - there are several billion pounds sitting in accounts earning next to no interest.

What Barclays is saying is that from November, it’s ending this game – at least in part of its savings book. If you want an instant access cash Isa, there will be just one. And it won’t pay a market leading rate, but it won’t pay an awful one either. Furthermore, it will be the same deal for all customers – new and old alike.

There’s much further it could go – extending this to its non-ISA savings book for a start. Barclays has an astonishing 36 ordinary savings accounts that are closed to new business, going by names such as Bonus Saver and Nest-Egg saver (both of which pay a measly 0.1%).

I’d also like to see Barclays (and other banks) making a commitment to treat people more fairly if they’re in a fixed rate savings account – promising to roll them over into instant access account paying a decent rate, when their fix comes to an end.

But this week’s move is another good step in the right direction. And I’m told that similar changes in the rest of the savings book are being looked at.

Obviously Barclays has got a long road to redemption after the troubles and reputational damage it has suffered over the past few years. But the work is definitely being done. And unlike some of its competitors – which aren’t making steps nearly as bold – it’s not wasting its efforts in creating marketing campaigns which boast about how it’s changed. In the world of banking reform, banks should only be judged on their actions – not their words.