Are you being left in the dark by your bank?

James Rowe: Hello, it's James at home this week. Thanks for tuning in to the Which? Money podcast. Now, as you listen to this, I'm actually away on holiday, on a cruise round the Norwegian Fjords. Sorry if I've made you a bit jealous with that.

Anyway, this week's episode of Which? Money is one of hand-picked for you from our archive. It's an episode very much still relevant that we recorded and originally brought you back in January with some brilliant research done by my colleague, Holly Lanyon. It's all about whether or not banks are doing enough to tell us when a better rate is available for savings accounts.

Now, a quick note before you listen. Holly will be telling us about loads of customers she's spoken to as part of her research, and she's talking about people with a variable rate on their savings account – and whether or not their banking provider has been in touch with them over the previous two years when she conducted the research. Important note before you listen to this.

Now, we will be back with brand-new episodes next week. If I just have a look at the plan, I'm just going to give you a bit of a heads-up with what we'll be talking about over the next few weeks. We'll be talking about pensions, we're talking about bank branch closures – always a always a big topic – stuff on home insurance, inheritance tax planning as well. So loads more brand-new stuff to come on the podcast. But let's get on with this week's episode of Which? Money.

James Rowe: I'm sure I'm not the only one who regularly receives notifications from my bank telling me that the interest rate on my savings account is going down. But are banks doing enough to tell us when a better rate is available? Welcome to this podcast from Which?.

Hello, it's James Rowe in the Which? studio and alongside me today I've got Which? researcher Holly Lanyon. Holly, hello.

Holly Lanyon: Hi, James.

James Rowe: How are you?

Holly Lanyon: Yeah, good, thank you. Happy to be back in the studio.

James Rowe: Likewise. And also, Andy Webb, Editor-at-Large at Be Clever With Your Cash. Andy, hello.

Andy Webb: Hello. Great to finally be in the studio with you rather than down the line.

James Rowe: I was going to say, we've done a few podcasts with you before and you've always been online, so welcome to the studio.

Holly, it's always interesting when we have you on the podcast because you've been a bit of an all-rounder for us over the last few months. We've definitely done credit cards with you, we've done funeral planning with you, but savings is the order of business today.

Holly Lanyon: Yeah. Yeah.

James Rowe: You've done an investigation looking at savings rates and, as I said at the top, the lengths that banks go to to tell us when a better rate is actually available. Do you want to just give us a bit of an overview of what you've been looking into?

Holly Lanyon: So, yeah, banks have an obligation to tell you when a better rate's available, and we really wanted to hear from savers about how well that's working for them. So we did some consumer research, spoke to savers with variable rate accounts and asked them whether their provider has suggested they do something to get a better rate.

James Rowe: And I'm going to jump the gun because I'm going to reveal it, unless you wanted to reveal it. The amount of savers – I've got here that three quarters think providers have some responsibility for ensuring customers get the best rates. Now, that's true, but equally you said that there is a responsibility – there's an obligation on banks to do that.

Holly Lanyon: Yeah, exactly. So the Financial Conduct Authority did some work in 2023 when the Consumer Duty came into effect. They reviewed the cash savings market and they found a kind of – some areas of concern. So, especially easy access accounts had really low rates. They found that loyal customers were being penalised where banks were reissuing products with better interest rates, and often switching processes weren't that easy. So they made some expectations really clear under the Consumer Duty that banks need to make customers in the lowest-paying accounts aware and prompt them to access better deals.

James Rowe: And Andy, to bring you in, do you think banks do enough? Obviously, we've got a lot of data here that Holly's done the investigation, but I mean, just from your perspective, do banks do enough to treat their customers well?

Andy Webb: There's so much that's going on right now which does make it harder for you to get the best deal if you are just staying where you are – if you aren't doing what we'll come to later, that kind of shopping around and finding the best rate. Something that really annoys me right now are these one-year bonuses. There's so many more of these. In fact, for a while there was a kind of load of three-month bonuses. You get an attractive rate for the first sort of period, then it drops down. And often these bonuses are just for new customers. So again, existing customers are missing out, which is a real pain. But then equally, after that length of that bonus, then your rate drops down massively again. 

And we know there is a lot of inertia of people not taking the action. They've got it in there, they think it's okay and don't go and check back. So you can see all these rates suddenly dropping down. So yeah, I think there's a lot of frustration for people when they're trying to find those better rates, and that's a big part I think of the problem.

James Rowe: The bonus has just jumped out at me straight away because it was about two months ago and I opened a new cash ISA. And I think the rate was about 4.1%, and then I looked and I thought, "Oh, I'm getting a bonus here of about 1.6%." So in 12 months' time, my rate's going to go down to whatever it is, 2.something or other. And then the onus is on me, isn't it – to either shop around or maybe try and speak to the provider and say, "Have you got a better rate available?" It's tricky when the onus gets put on the customer, isn't it?

Andy Webb: It really is. And as you found in your investigation, they are telling you some of the time, but not all the time. And I think the big issue seems to be around consistency. Like, maybe they'll tell you once a year that your rate is not very good, or maybe they'll only tell you when the rate does fall after a bonus or just a general cut that's going on. So yeah, all that kind of – you have to go and check to find out, one, what your actual rate is right now because it might have changed. But two, then, is there something better I can do? If you aren't being proactive, you can be having really, really, really poor rates, which I think your analysis sort of found some really low on average what people were getting, didn't they?

James Rowe: Yeah. Do you want to tell us a bit more about the findings, either what the customers told you or what the banks said? Because I guess what the customers said and what the banks said were a little bit different.

Holly Lanyon: Yeah, so maybe I'll start actually with with what the banks said. So, obviously they have this responsibility under the Consumer Duty. So we surveyed 11 major providers, and they all told us that they inform savers in low-paying accounts when about better products. Most said they do this exactly when interest rates change, when fixed terms come to an end, and also periodically. Nine out of 11 also said that customer service staff are trained to alert customers when better deals are available. So if you're in branch or on the phone, you should be able to get support to get a better rate.

The thing is, when we spoke to customers, it seems like the message isn't necessarily always getting through. So when we surveyed consumers – a little note on methodology here. So, we asked –

James Rowe: I like this. We're really getting into the detail. Yeah, go ahead.

Holly Lanyon: So yeah, so we asked people basically about the savings accounts they hold, and some of the people in our survey told us about multiple accounts. So when I refer to any of these statistics talking about account holders, just note that that really refers to instances of holding a saving account rather than individual survey respondents.

James Rowe: Got it.

Holly Lanyon: So with that out the way, I'll get into the stats. So yeah, so overall we found like four in 10 account holders said that their provider had prompted them to get a better rate. Obviously, important context around that stat is you wouldn't necessarily – if you're already getting the best deal, you're not expecting your bank to email you to tell you to get a better rate.

And we did find that those in lower-paying accounts were slightly more likely to say they'd been told. So, those who estimate that they're earning less than 3% interest, half of those said they'd been told how to get a better rate, compared with four in 10 of those who think they're earning more than 3%.

But interestingly, what seemed to be the more important factor was how much money you have in your account. So, we found that those who saved the most were more than twice as likely to say that their provider had prompted them to get a better rate than those with the least in their account. So those who have who told us that they've got over £100k saved, eight in 10 of those said they've been prompted to get a better rate, whereas those with less than £5,000 in their account, just three in 10 of those said they'd been prompted to get a better rate.

James Rowe: I'm trying to work out what the logic is behind that. If that all stacks up, why would a provider tell a customer with more money saved that there's a better deal available compared to those with less money?

Andy Webb: Yeah, I don't know. If you sort of found that one of the banks said that £100 was the minimum where they tell you as well. And again, like if you don't have much money in an account, it's not going to make much difference if you're getting an extra 1 or 2 or even 3% more. You're talking about just a few quid. But even at that £5k, if you're moving from 1% to 4%, that's an extra £150 over a year. That is substantial. That's not something to ignore. So it is really strange that there is this discrepancy there.

And I think there's also another problem you get that when this message comes through from the banks – I had one actually just today from Lloyds Bank for an old account that I'm not using anymore. And it tells me that the rate is falling, and it tells me I can get a better rate, but I have to go to a link. Type in that link, it just took me to a page that explained the difference between saving and investing. Didn't actually take me through to the actual accounts that are available. So there's a real barrier there. So they might not even realize they've been told necessarily there are better rates available because it's not clear. There's nothing there that actually says, "You can get this instead," just that the rate is falling.

James Rowe: And I guess that comes down to these stats where – I'm not suggesting your data analysis is wrong – but clearly things don't add up in regards to that. All the providers said that they do instruct their customers that a better rate is available, but only four in 10 customers said that it happened to them. So clearly something isn't adding up. And, you know, perhaps it's like what happened to Andy, where he gets told that there might be something available, but he goes to do it and the process is so drawn out, it's not easy. So the customer doesn't feel like they've been treated as they should.

Holly Lanyon: Exactly. Exactly. It's clear that some things just – yeah, the message isn't getting through somehow. And some of the research we did with providers I think provided a bit more context on what could be going wrong.

So, we asked providers about the communications that they send to tell savers about better rates, and four of the 11 said they don't actually list the better-paying accounts in the communications. So, yeah, exactly. You might be getting a notification saying you can get a better interest rate, but like you've just said, Andy, it's not clear, actionable information. It's not easy – yeah, it's not easy to kind of take the steps you need to to get to put your money in the best place. So I think that's definitely part of the problem.

I think, you know, engagement could also be an issue. So also, you know, it's kind of important to point out that one in six of the account holders said they didn't know or couldn't remember whether their provider had sent them these communications. So I think, you know, there is probably a fair portion of the savings community who have become disengaged. And like you said, it's been a tumultuous few years with so many kind of notifications, product launches, things like – I think, yeah, some people have probably kind of checked out a little bit.

Andy Webb: Yeah, there's definitely I think notification fatigue a lot of the time, isn't there? And on top of that, you know, I remember back in the day when you would get a paper statement, right? And you might not always look at it in detail, but at least it came and you'd probably open it and scan over it and look at it. Now with everything in apps or online banking, half the time I don't actually look at what's being sent to me because I think I know what it is – maybe because of my job I probably do know what it is – but I think that behaviour is probably quite common. You're like, "Oh yeah, I'll look at it later." You got notification, you got a little thing, but actually you never get around to it. It's almost too passive, too much hidden in the background. So, yeah, it needs to be maybe more in your face about this – changes.

Holly Lanyon: Exactly. And we heard from members who said things along these lines. They said, "You know, it just feels like a lot of homework, trying to keep up with it, the volume of messages that I'm getting." And yeah, so I think that's definitely part of the story.

James Rowe: And it should be easier, though, shouldn't it? You know, to be told by your provider, A, what's available and then, B, how to do it. I know you were talking about the notification fatigue and I don't know about you, but, you know, when I buy something, I get a notification from my bank on my phone to say you've just spent £3.75 on a meal deal – which happened about two hours ago. And thought, you know, if they can do that, then surely there should be an expectation that they can send me a notification to say there's a better rate available – half a percent more or a percent more – click this button, da-da-da-da-da. Surely that should be easy enough, shouldn't it?

Andy Webb: Oh, I mean, like even if they don't do that – but even if they did, if the application process isn't even that simple – you know, what would be great was say, "Look, we offer you this account. If you want to do it," as you say, "click this one and we'll just move your money to the account for you." But no, you have to go through the entire application process again.

Or there are some banks – Marcus has done this in the past – where they offered all their customers a bonus rate, which sounds great. Anyone can get it, but you had to go in manually and activate it. I mean, I just didn't get that. Why not just say, "Here's a rate for 12 months. Okay, it's only for 12 months, then it will go." But what's the benefit in making everyone go and do that? Obviously they wanted fewer people to do it, but they can say that we have done it. So yeah, the whole process from telling you what accounts are available to then actually getting that account could be so much simpler across pretty much I would say all the banks. Very few of them which are actually doing this in a kind of easy way.

James Rowe: Should we call out Santander on a positive note, actually? Because one customer wanted to call out Santander for being really impressed by their proactivity.

Holly Lanyon: Yeah, so we did hear some really positive stories where banks get it right. And actually a couple of those were where they'd been helped in branch by a staff member. So, yeah, I think that member had been into branch to change their savings account and the staff member had actually pointed out to them they could get double the interest rate on another account. And I think that's just an example exactly of what customers want. It's like very clear, actionable information that gets them a much better deal. It's beautifully simple, it seems.

James Rowe: It is beautifully simple. And when I read this in the magazine, my instant thought was this is a good quality of in-branch banking. But we're losing all the access to that, aren't we? So it almost cuts another barrier in the way, doesn't it?

Andy Webb: Yeah, absolutely. And, you know, the people we know who are using branches more often than not are going to be people who aren't digitally connected in a way that more and more people are now as well. So, you know, you're looking at the people who are going to bank branches maybe getting that support, depending on the bank. For everyone else, you know, missing out potentially completely because it is too subtle, it is too hidden away.

I mean, there was another example you gave of Nationwide and they do this quite good alert you can set up. So I think that's quite positive if you sign up for it, and they will tell you whenever there is a change or a better rate available for you, which is – which is really good. But with the caveat that's still within Nationwide. You know, we've all been talking about this context within your own bank, them letting you know you can get a better rate with them. There is a whole world out there that actually for most people, if they do look at different banks anyway, even if they get the best rate with their bank, they probably could beat it – at least for the majority of people, I would imagine.

Holly Lanyon: That's an interesting point, actually. Cuz yeah, I think as you said earlier, like shopping around is key. And when we asked providers, we did ask them, "Do you tell people about better deals elsewhere?" None of them do it obviously in the actual communications themselves. But I was interested to learn that Coventry Building Society do have a tool on their website where you can compare their rates to that from other providers.

James Rowe: Yeah. I did wonder about that, because then you think, you know, if there was an obligation for banks to tell you about rates available elsewhere, obviously that is likely to hinder them. But then I do wonder how many of us would actually action it and go through with it. We are a bit lazy with this sort of thing, aren't we? I'm not talking about us, but, you know, generally aren't we though?

Andy Webb: Well, yeah, and the process doesn't make it that much easier either. If you do want to move your money to a different bank – if you're opening up a new account within your existing bank, at least you can transfer the cash once you've gone through the faff of opening the new account. You can transfer it within your online banking or your branch or your app, or whatever it might be. If it's at a different bank, then you've got to actually sort of – well, with a non-ISA account, you know, take the money out or close the account down, and then move that to your current account, and then set up a new payment detail for the new one, and then pay that across to that particular branch – that particularly new savings account – which if you're doing it once a year is fine. You know, if you're trying to sort of chase the best rates and do it on a regular basis, that is a lot of admin to add in.

James Rowe: Should we talk about the regulator? So we're talking about the FCA here, aren't we – the Financial Conduct Authority. What more can they do, and what more would you – do they need more powers, effectively, to try and improve this situation?

Holly Lanyon: Something that came out in – so the FCA did their cash markets savings review in 2023, and then an update in 2024. And a lot of the things we were saying about, you know, the communications being too passive or generic, they did – they pulled out some of those points in that review and said, yeah, a lot of the time the information isn't clear and actionable enough. And they did say as well in that update that it's important that providers are working with consumers to make sure they know like – they're doing research to find out, like you say, when is the best time to get this information, what format is the best way for savers to get this info.

And I read I think there was a conference about the Consumer Duty in October talking about the next steps, and they did say there, the FCA did say that the next stage of the Consumer Duty will really be about outcomes. So it's really – they will be looking at firms and saying, "Okay, you're doing these communications, but are they actually moving people – like, are they actually prompting people to move?"

Andy Webb: Yeah, and I wonder – we know that this year there's going to be a big push from the government and from providers to get people to invest rather than save. So I imagine this could get lost. If anything does go on there actually, then you've got even more messages going on what's to do with your money. And I wonder whether that that investing message – which is important for a lot of people if they have those long-term sort of saving goals – this might get lost again in that, you know. That kind of message, cuz it's a bit confusing, isn't it? Like move your savings to a better savings account, but also move it into a stocks and shares ISA or whatever it might be. So I can imagine – I can't imagine it getting too much simpler just yet.

James Rowe: So just another quick note on about the process of of moving your money, and, you know, you touched on it there about how it is tricky to set up the new account, move the money out, close that account, move it back again. Could the FCA do something around that to make that simpler? You know, obviously we've got the element of being told by your bank and your provider when a better rate is available, but could the actual process of moving that cash – could that be made easier?

Andy Webb: I think for a lot of people, this is just something to like not be too put off. I know we're talking about, "Oh, you've got to do this," but we're not talking about doing it all the time. You know, I would love it if you checked your account every sort of quarter. That'd be great, to make sure, particularly we've been in this sort of cycle of base rate cuts. So there have been more – interest rates have been falling anyway, and we'll probably in this year see a couple more. So keep an eye on it every quarter would be quite good, maybe every six months.

But you don't have to be doing it all the time. Don't just sort of watch every sort of minute little change in the account. So we're saying, you know, maybe a couple of times a year, maybe just once a year, you're opening up a new account and moving it. And if you've got a decent sum, you know, and you're getting a significantly better rate, it's worth that time to do that, you know, to make sure you are – it's been a little bit of admin time, it's not a huge amount. So I wouldn't say it's worth prioritising changing that process right now and don't put people off. It's just a bit annoying that that is how it works.

James Rowe: Yeah, in my notes here I've said hopefully this doesn't put people off! Because it's tricky, isn't it? You know, especially because I don't know how it works for you when you save money, but for me, every payday I sort of go through all of the money admin and get everything sorted on that one day. And for me that really works because I think, okay, the money comes in, I move it to where it needs to be, and then I can almost just forget about it until next month when I do it again. Is that a good sort of mentality to be in? Is that something we can say to people – maybe next time you get paid, check the rate on your savings account, is it good enough, can you get a better rate elsewhere, and try and deal with it in that one go and then you can just forget about it until four weeks later?

Andy Webb: Yeah, I mean one of my favourite types of savings account is something called a regular saver, or sometimes called a monthly saver. And they are perfect for that new money you're putting aside every month, and most of them last for 12 months. So it is just an annual thing you're doing. You're opening these accounts up, you're putting the new money in, like you say, just when you've got paid, and that's – you can do as a standing order, so it goes out every single month, you don't have to do anything yourself. And it's just looking after itself for 12 months. You put a note in your calendar, or hopefully you get a notification from your bank telling you that account's about to mature, you get all that money back, you get all the interest from that, and you open up a new one and start again.

So that can be a nice simple way of ensuring you're getting a really good rate, because some of those regular savers are, you know, 7% plus, without the kind of the faff of having to always check in what rates you're getting. Because any lump sum you've already got, hopefully you've put that somewhere and you can kind of periodically check that. You're not checking it every month, you're just checking it as I say, you know, two, three times a year, and maybe moving that if you need to. But just the new money, if you've got that top rate anyway, and it's maybe fixed – which some of them are – then nice and easy. You're kind of sorted for 12 months.

James Rowe: I'm going to tell you both an anecdote that is going to make you tear your hair out, by the way. Just before Christmas, I had some friends over and we were talking about finances, as people do now that I'm an adult and we talk about that kind of thing. And one of my friends said that she doesn't have a savings account and it all just sits in her current account, which nearly made me tear my hair out! That is simply not a wise decision, is it?

Holly Lanyon: No, but you'd be surprised. So I did a separate story actually in the same issue of the magazine looking at how many people use their current account for savings. And we surveyed current account holders, and two in five said they keep savings in it. On average, around £3,800.

James Rowe: Oh, wow. That's a lot, yeah.

James Rowe: Not an insignificant amount of money.

Holly Lanyon: No, and some saved a lot more. So I think it was around a quarter said they had over £15,000 saved in their current account.

James Rowe: Oh, my word! Wow.

Andy Webb: And I mean the big problem there obviously is that most current accounts are offering zero. Not even a low rate of interest – no interest at all. So you're missing out on a huge amount of cash. Even if you had it in a really bad account paying 1%, you're going to be doing better. But obviously we know you can get 4% relatively easily right now.
So, yeah, that's the big reason to not put it in your current account. But there are a few other reasons as well why you might want to move it out. And a big one for me is, if you keep your savings in your current account, it's so much easier to unintentionally dip into that cash and spend it without realising.

James Rowe: Just because it's there.

Andy Webb: Yeah, absolutely! Or you just thought, "I'm spending, the balance is fine, I'm just spending, spending." Whereas if you put it in a separate account, you have to kind of wilfully go in to that savings account and transfer the money to your current account so you can spend it. So there's a little bit of friction there that might help prevent some kind of spending you might regret later on. So really important, yeah, have it separately, ideally earning it, you know, at the best rate you possibly can.

Holly Lanyon: And there's a third reason as well. I was chatting to a colleague when I was writing that story and she made the important point that often as well, if your money's in a savings account, there's less risk of fraud because most of the time they don't have a card attached. So you're kind of reducing the risk of losing any money to card fraud.

Andy Webb: Yeah, and a similar thing there as well, we know like every year this happens, but last year it felt like it happened more than other times, is when your banking app goes down. You know, so if your money is in your current account, or even if it's in a savings account with the same bank, then, you know, the app goes down, you can't get it. But if it is a separate account sitting elsewhere, at least you can then hopefully access it, as long as it is at a completely different bank. That kind of gives you like a little bit extra protection there as well.

James Rowe: Yeah, that happened to us. We were at a party last year and there was a few of us there, and as a family there was three of us – me not included – but three of them had only had their money with one provider, and they couldn't use their online banking, they couldn't withdraw any cash, they couldn't even use their card or even Apple Pay or anything. So they were just left without being able to spend any money – which was great for them because then I just had to buy everything! But it does show that it is important to have that money sort of spread out in cases like that.

Andy Webb: Yeah, yeah, definitely. And people are like, "Oh no, I've got to remember another login," or these things. But so much more now you've got like face ID or whatever it might be. So it's not that difficult. Just, you know, even if you only access it periodically, just make sure that password is somewhere safely protected so that no one can get into it. And, you know, you're getting the best of both worlds then.

James Rowe: It does sound overwhelming sometimes to think, especially when you're sat there naming all these different banks and all these different numbers, it sounds overwhelming and it can put you off. But what would you say to people? Just let's have a look at the list, see what the restrictions are, look at what the rates are, and just get moving with it. Get it done, and then you can – in some cases – forget about it for an entire year.

Andy Webb: Yeah, absolutely. And it will make you money. If you've got, you know, a few hundred quid, okay, maybe it's not going to make too much difference, maybe don't worry about it too much. If you're not getting anything at all, definitely worth getting something. If you're getting close to the top rates, then maybe you go, "Okay, maybe I'll leave it where it is." But otherwise, you'll make some money from doing this.
And the big thing to look for as well is to beat the rate of inflation as well. So as long as you're doing that as well, in real terms your money isn't losing any value. At least if you're matching inflation, you're keeping pace. So yeah, it's well worth doing it as much as you want, as little as you want, but at least do it.

James Rowe: Andy, lovely to have you in the studio. Thanks for coming in.

Andy Webb: A pleasure.

James Rowe: And Holly, thank you.

Holly Lanyon: Thanks, James.

James Rowe: That brings to an end another podcast from Which?. There's a load more for you to read about everything we discussed today – just head to the episode description for more useful everyday advice.

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