James Daley

By James Daley

Which?, the consumer group, launched a new campaign at the weekend - Scrap the savings trap - a campaign that should never really needed to have been mounted - or at least not in 2014.

Its key ask is that banks and building societies stop the practice of having hundreds of different accounts, most of which now pay derisory interest rates unbeknown to most of their customers. Instead, it suggests, savings providers should have one account that all other accounts tip over into once the initial bonus interest rate period has come to an end. Beyond that, it wants transferring your Isa to be simple (which it currently isn't), and wants banks and building societies to be clearer about the interest rate that savers are earning on their money.

Most of this is basic stuff - which the banks have been called out on before. Back in 2010, Which? launched a similar campaign called the Great British Savings Scandal. A key ask back then was that banks and building socities print interest rates on statements - but this still isn't a given.

I bank with First Direct - reknowned for its excellent customer service. Yet, when I logged onto my internet banking yesterday and tried to find the interest rate on my savings account, it was nowhere to be found. Other big banks are just as bad.

Nothing to be scared of

I've never understood why good banks have been so slow to get behind such simple measures of transparency. If they're worried that being honest with customers about the interest rate on their savings will lose them business, I think they're being overly cautious.

In this low interest rate environment, the difference between earning 0.1% and 1.5% a year on £1,000 amounts to £14. It's not exactly life changing. Most people are vaguely aware that they're earning a bad interest rate and they simply can't be bothered to switch.

There are presumably a significant minority who have no idea that they're earning so little, and who might switch if they knew. But not even all of these would get round to switching in a hurry.

Paltry interest rates are fine

I've not actually got a problem with the banks' bait and switch tactics, whereby you get roped in on a high rate, which later drops to a poor deal. It's part of life in a free market. As long as banks are upfront about when the high rate will end, and clear about how much you'll be earning if you don't move your money, that's fine with me.

Which?'s suggested solution - to force banks to have one single account that all other accounts tip over into - is perhaps a bit heavy handed, although it would certainly be effective at clearing up some of the confusion around names of accounts. The fact that one bank has accounts called both Saver Reward and Reward Saver, one of which pays a good rate and the other a bad one, is not much help to the customer who's trying to understand whether their money is in the right place.

But if it were down to me, I'd smply force banks to be more transparent. If every customer received a letter, email and text when their savings rate expired - and every paper and online banking statement included their current interest rate, along with details of when their offer expired - then no one could claim that they were kept in the dark. Many people would surely leave their money in poor paying accounts - but at some point, the customer has to take responsibility for their own affairs.

It will always be the way that the more proactive consumers get a better deal than those who are apathetic. It's your choice whether you want to shop around for a new car online, or whether you want to walk into your closest dealer and buy it at a mark-up. But at least it's a level playing field.

In the savings market, there's still too much activity that looks like it is designed to prevent customers from seeing the whole picture. So sign up to support Which?'s campaign, and let's hope this issue can be put to bed once and for all this year.