West Bromwich criticised by watchdog |
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| Strategic Finance | |
| Written by Roberta Murray | |
| Tuesday, 26 May 2009 | |
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Building society accused of "coaxing savers into risk."
Consumer watchdog Which? has criticised West Bromwich Building Society for encouraging savers to invest more money than is covered by the Financial Services Compensation Scheme (FSCS). The building society has launched a fixed-term bond - E Bond 23 – which offers an attractive 4.27 per cent return. However, if savers want to take out the monthly income option, they must invest more than the £50,000 covered by the FSCS. With the base interest rate plunging 4 per cent since October 2008, savings rates have also taken a dive. Some instant access accounts now offer just 0.1 per cent interest, leaving fixed-term deals as the best option for savers looking to get a decent return. Which? will be writing to West Bromwich to raise its concern that the building society is acting irresponsibly by encouraging savers to invest more than £50,000. Which? personal finance campaigner, Vera Cottrell, says: “Using an attractive rate as a carrot to encourage savers to breach the compensation limit is, we say, irresponsible and people need to be aware of the risks involved. “Given the battering that savings rates have taken recently, this may prove a tempting product for people in retirement who are looking to make the most of their savings. However, we’d warn against putting any more than £50,000 of your nest-egg in any one institution.”
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