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Savers will continue to get a raw deal until the Government implements measures to ensure rate hikes are passed on straight away, says Mouthy Money co-editor Edmund Greaves
Chancellor Jeremy Hunt sat down with big banks last week to hash out a new ‘mortgage charter’ deal to protect homeowners with loans from soaring rate hikes.
Hunt has pledged to take action on savings rates too, and it is now widely recognised that High Street banks simply aren’t passing on rates quickly enough.
While it would be easy for Mouthy Money to claim a victory of sorts after our vocal campaign on this issue, we don’t believe the solution has yet been found.
It is now essential that the Government either legislate or use other binding methods to coerce the savings sector into accepting that firms MUST pass on rates as soon as the changes feed through from the Bank of England, in the same way that already happens for mortgages and other debt product such as credit cards.
Setting a rule, for example, that prevents banks from increasing debt product rates unless they also increase their savings rates, would be a good start.
This must happen as soon as possible to protect the economy from the ravages of inflation.
At the core of this is rewarding savers for not spending their cash. While the mortgage market is large, not everyone has access to it. But everyone is a potential saver, given enough incentive from their savings interest rate on offer.
If, as a country, we truly want to tackle the bane of inflation then the Government must act now to stop savers from the raw deal they have been given for so long.
Instead of simply punishing debt holders, we must collectively reward those who wish to save for the long term. Not only will this help the battle against inflation, but it might also encourage a new generation of savers, which in and of itself could be the solution to some of the UK’s longest-term financial woes.
Edmund Greaves is editor of Mouthy Money. Formerly deputy editor of Moneywise magazine, he has worked in journalism for over a decade in politics, travel and now money.