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Natwest ranked worst for cutting ISA rates

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
20/06/2016

Natwest has cut its cash ISA rate more times in the past six years than any other major bank or building society, research from Which? reveals.

The consumer group analysed 212 instant-access cash ISAs from 21 banks and building societies to reveal the worst offenders when it comes to rate cuts over the past six years.

It excluded cuts customers would have known about when they took out the account, such as bonus rates expiring.

Natwest had the worst record on cuts-per-account, with eight cuts across two accounts between April 2010 and April 2016.

Its e-Isa earned savers 2% in 2010 – or £204 for those who invested the full 2010 ISA allowance, but customers who haven’t moved their money will be earning a meagre 0.25% now – or just £25.50. This means consumers saving the same amount in 2016 as 2010 are £178.50 a year worse off than they were when they took their ISA out.

Which? also looked at the ISA accounts paying the stingiest rates to existing customers.

M&S Bank’s Flexi Cash ISA was the worst culprit, paying customers just 0.05% since all of its 30-month bonus rates expired. Halifax, Lloyds and Santander all offer accounts with short term introductory rates as low as 0.25% if customers don’t switch away.

There was some good news for consumers. Typically, building societies have been more dependable making fewer cuts over the past six years. Principality Building Society came out top having made just one cut across five ISAs and West Bromwich continued to pay existing customers the 1.25% – 1.55% rate they signed up to, even though the accounts have now closed to new business.

Which? said Coventry Building Society deserves credit for rewarding existing customers, all of whom currently earn upwards of 1.5% on closed accounts.

Harry Rose, Which? Money Editor, said: “Many savers simply want a provider they can trust to keep their ISA rate competitive. Too many banks are paying truly woeful rates of interest or are scissor-happy when it comes to cutting rates often penalising their most loyal customers.

“Our research shows savers who don’t want to have to keep moving their savings about should consider parking their cash with one of the more reliable building societies who have been better at not cutting their rates for existing savers.”

A NatWest spokesperson said: “NatWest has simplified and improved our savings range since 2010 and we no longer offer introductory ‘teaser’ rates or accounts such as e-ISA that are only available to certain groups of customers We believe our current savings offering is fair and helps meet our customers needs. In April this year we also introduced two new savings accounts ‘Savings Builder’ & ‘Premium Saver’ that continue to build on this approach by rewarding customers for positive savings habits.”

WHICH table