Are banks discriminating against existing savers?
A worrying trend is developing in the UK savings market with a number of financial institutions introducing so-called "new money" savings accounts. In effect these are relatively high interest accounts or bonds which are only open to new customers and "new money". They specifically bar the transfer of existing funds within the same institution thereby discriminating against existing savers and potentially costing them significant interest income.
While there is potentially a case for unlawful discrimination against existing savers it is the fact that this particular trend has returned after apparently disappearing for some years, after various regulatory and government guidelines were introduced, which is worrying. It seems as though UK banks are now using the savings market to not only shore up their balance sheets but also increase their liquidity which they will then use to finance mortgage applications. This may to some extent explain why mortgage liquidity has yet to increase at a time when savings rates are moving higher although albeit under very strict criteria.
However, is it morally correct for existing customers to receive lesser rates of interest and be effectively barred from new high interest accounts? Will the UK regulators take up this particular challenge and fight for parity for existing customers?
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