Interest rates

JEFF PRESTRIDGE: NatWest pays pitiful interest rates to savers

JEFF PRESTRIDGE: NatWest, whose chairman Howard Davies earns £750,000 a year, continues to pay pitiful interest rates to savers

Defence: Howard Davies, President of NatWest

NatWest Chairman Howard Davies took to the airwaves on Thursday ahead of the inevitable 0.25 percentage point hike in the Bank of England’s interest rate to 0.75%.

For savers, especially those with accounts at NatWest and Royal Bank of Scotland, his words were not pleasant to listen to. He told Radio 4’s Today program that savers should not expect to benefit fully from the rise in the base rate.

‘There will be passages through [to savers if base rate rises],’ he said. “But the market is very competitive right now, so I don’t think it will be one-to-one.”

Howard, paid £750,000 a year, shamelessly continued to plug the bank’s Digital Regular Saver account which pays a hefty 3% – but only on balances up to £1,000, with maximum monthly savings capped at £150 max.

Of course, there was no mention of the pitiful 0.01% the bank pays its Instant Saver and Cash Isa customers (a higher rate of 0.1% is paid once Cash Isa savers have amassed more of £50,000).

For the record, these rates have remained unchanged since the base rate began its upward trajectory last December when it stood at 0.1%. According to Savings Champion, only 40% of banks and building societies have announced rate increases on (some) savings accounts since December. They do not include Davies’ NatWest.

Fortunately, some suppliers now recognize that it is time to respond positively to our Give Savers A Rate Rise campaign, launched last December. Over the past few days, building societies Skipton and Yorkshire have both said they will be giving variable savings account customers a much better deal than before.

Skipton promised that from the end of the month, all of his variable savings accounts would pay at least 0.5% interest. Meanwhile, Yorkshire says that from the middle of next month its ‘unlimited access’ (instant access) accounts will pay a minimum interest of 0.85%. I hope Davies’ NatWest will follow suit and give its savers the interest rate hikes they’ve been waiting for.

The Woodford Equity Income debacle rumbles again and again

Like my prostate cancer, the Woodford Equity Income debacle rumbles again and again. It must now be addressed with resolute action from a regulator who has allowed it to fester unacceptably for three years. Last week, Link, the fund’s supervisor – yes, an oxymoron that Link failed to oversee – said the remaining £141m of assets were unlikely to be sold this year. Even more frustration for the 400,000 investors in the fund who want to recover the rest of their money and move on with their lives.

Although the Financial Conduct Authority’s report on the circumstances surrounding the abrupt suspension of the £3.7bn fund in June 2019 is almost complete, the regulator is silent. Inquiries from this newspaper were refused. Indeed, they were ignored, suggesting that the report may be released before the Spring Youngsters have sought their independence.

I hope so. The Woodford boil should be started as soon as possible. Link should be held accountable for his failure to oversee the Woodford fund in the best interests of investors – and required to pay appropriate compensation.

Nor should fund manager Neil Woodford go unpunished. He took millions of pounds in management fees from investors – shockingly, £65,000 a day after the fund was suspended – while betting his future on a pile of high-risk unlisted assets that simply didn’t have their place in an equity investment vehicle.

Given the regulator’s mishandling of past financial scandals (London mini-bonds and Capital Finance, mis-selling of pensions to British Steel workers), it can’t afford to let Woodford go.

Indemnities, fines and bans are the order of the day.

Don’t expect miracles from the Chancellor

Don’t expect financial miracles from Chancellor Rishi Sunak in his spring statement on Wednesday. Although the economic case for postponing National Insurance contribution hikes is now overwhelming, it appears that Sunak is not ready to turn around.

Perhaps it will surprise us. Sometimes miracles happen.

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