Defence: NatWest chairman Howard Davies
NatWest chairman Howard Davies took to the air waves on Thursday ahead of the inevitable 0.25 percentage point rise in the Bank of England interest rate to 0.75 per cent.
For savers, especially those with accounts at NatWest and Royal Bank of Scotland, his words did not make for comfortable listening. He told Radio 4’s Today programme that savers should not expect to benefit in full from the increase in base rate.
‘There will be some pass through [to savers if base rate rises],’ he said. ‘But the market is very competitive at the moment, so I don’t think it will be one for one.’
Howard, paid £750,000 a year, shamelessly went on to plug the bank’s Digital Regular Saver account that pays a juicy 3 per cent – but only on balances of up to £1,000, with maximum monthly saving restricted to no more than £150.
Of course, there was no mention of the pitiful 0.01 per cent that the bank is paying its Instant Saver and Cash Isa customers (a higher rate of 0.1 per cent is paid once Cash Isa savers have amassed more than £50,000).
For the record, these rates have remained unchanged ever since base rate embarked upon its upward trajectory last December when it stood at 0.1 per cent. According to Savings Champion, only 40 per cent of banks and building societies have announced rate increases on (some) savings accounts since December. They do not include Davies’s NatWest.
Thankfully, some providers are now recognising that it is time to respond positively to our Give Savers A Rate Rise campaign, launched last December. In the past few days, building societies Skipton and Yorkshire have both said they will give customers in variable savings accounts a much better deal than previously.
Skipton has promised that from the end of the month, all of its variable savings accounts will pay at least 0.5 per cent interest. Meanwhile, Yorkshire says that from the middle of next month, its ‘unrestricted access’ (instant access) accounts will pay a minimum 0.85 per cent interest. I trust Davies’s NatWest will follow suit and give its savers the interest rate rises they are overdue.
Woodford Equity Income debacle grumbles on and on
Like my prostate cancer, the Woodford Equity Income debacle grumbles on and on. It now needs to be dealt with through resolute action from a regulator that has unacceptably allowed it to fester for coming up to three years. Last week, Link, the fund’s overseer – yes, an oxymoron as Link failed to oversee – said the remaining £141million of assets are unlikely to be sold this year. Yet more frustration for the fund’s 400,000 investors who want the remainder of their money back and move on with their lives.
Although the Financial Conduct Authority’s report into the circumstances surrounding the abrupt suspension of the £3.7billion fund in June 2019 is believed to be near completion, the regulator isn’t saying anything. Enquiries from this newspaper have been batted away. Indeed, they have been ignored which suggests the report may be out before the spring fledglings have sought their independence.
I do hope so. The Woodford boil needs to be lanced as soon as possible. Link should be held to account for its failure to supervise the Woodford fund in the best interests of investors – and required to pay due compensation.
Neil Woodford, the fund’s manager, should also not go unpunished. He took millions of pounds in management fees from investors – scandalously, £65,000 a day after the fund was suspended – while betting its future on a bunch of high-risk unquoted assets that simply had no place in an equity income investment vehicle.
Give the regulator’s shoddy handling of past financial scandals (London & Capital Finance minibonds, pension misselling to British Steel workers), it cannot afford to wimp out on Woodford.
Compensation, fines and bans are the order of the day.
Don’t expect miracles from Chancellor
Don’t expect financial miracles from Chancellor Rishi Sunak when he delivers his Spring Statement on Wednesday. Although the economic case for delaying the National Insurance Contribution hikes is now overwhelming, it seems Sunak is not for turning.
Maybe he will surprise us. Miracles sometimes happen.