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FLS sparking ‘savings nightmare’ says Moneyfacts

The Funding for Lending scheme is having a “devastating effect” on savings as research shows banks withdrew 191 savings accounts in November.

Research from Moneyfacts reveals the number of savings accounts including ISAs available to consumers has dropped from 2,389 in January to 2,038 this month. Over half of these were pulled from the market during November.

The number of saving accounts paying over the Bank of England base rate has almost halved over the same period of time, with a large concentration of these accounts also being withdrawn during November.

The number of accounts paying above the 0.5 per cent BoE base rate is currently 1,255 – down 304 from 1,559 in January. In November alone, 162 of these accounts were withdrawn.

FLS participants were revealed to have drawn down £4.4bn over the course of the third quarter.

Moneyfacts finance expert Sylvia Waycot says: “Moneyfacts research shows the devastating effect that the Funding for Lending Scheme is having on savings and there seems to be no sign of any let up in the misery that is sure to be inflicted on the nation’s savers.

“Providers are no longer just cutting savings rates as they were a month ago, they are now pulling entire products as they find that constantly reducing rates is not enough to remove them from Best Buy tables.

“Sadly, I see no sudden end to this savings nightmare. Funding for Lending has an 18 month window where providers can borrow Government money at vastly discounted rates and four years thereafter to lend the money out. For all of that time, the needs of the poor saver are going to be on the back burner.”

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  • Andy 13th December 2012 at 1:07 pm

    Tax-payers seem happy to go along paying for someone elses mortgages rather than leaving this task to investors i.e. savers. Have a nice sleep.

  • grey haired broker 13th December 2012 at 11:59 am

    I thought the idea behind FFL was to make more money available to lend and at lower margins.
    As usual the banks seem to be following their own agenda’s.
    They are more than happy to see large outflows from their existing savers investment accounts.
    So how are they funding their existing mortgage book?

    With new money from the FFL scheme at 0.5% over base!!