Number of savings products plunges to record low
The data firm said “a staggering” 274 products have been withdrawn from the market since January, with the total number down 127 since August when the Bank of England cut interest rates for the first time in seven years to 0.25%
There are currently 1,445 products available to savers, a significant reduction from the 2,093 peak in April 2012.
Charlotte Nelson, finance expert at Moneyfacts, said banks and building societies are opting to remove certain products rather than face criticism from savers and the media.
“The continuing downward spiral in rates sees many providers – particularly smaller building societies – creep up the best buy tables. Savers sensing a good deal immediately flock to these new best buy rates. Since these smaller providers are unable to cope with the influx in demand, they have no choice but to withdraw the product from the market,” she said.
Nelson said the introduction of the Term Lending Scheme, which will provide funding for banks at interest rates close to Bank Rate, will exacerbate the issue. When the similar Funding for Lending scheme was introduced in 2012, rates dropped and products were removed from the market altogether as institutions no longer needed to rely on customer deposits to fund lending.
“At a time when the FCA is implementing new policies [in December] designed to get savers switching, this reduction in product numbers is concerning. Not only will savers have a reduction in choice, but with rates in a constant freefall it is starting to become a pick of a bad bunch,” Nelson said.