Investment advice -savings rates not rising


Article by Phil

Latest analysis shows that Banks are reacting very slowly to pass on increases in investment advice savings rates to customers.

Many people will not be surprised by this.

Despite the Bank of England increasing base rates to 2.25% there has been little movement in interest rates. Figures from Moneyfacts in the FT Adviser (28/10/22) showed that average savings rates had increased from 0.2% in January to just under 1% by the end of October. Many expect the base rate to increase to over 4% in the new year. But investment advice savings rates are likely to continue to lag behind.

Why is that?

The main reason is that Banks know that cash savers rarely move their money around. That gives them little incentive to offer competitive rates. This also applies to investment advice savings rates. Almost 15% of funds in DIY investments are held in savings, at very low rates.

The FCA has considered getting involved in this area before. Work started to consider the benefits of a Single Easy Access Rate (SEAR) back in 2020 but was shelved during Covid. It remains to be seen if the project will be resurrected.

Some Banks are however bucking the investment advice savings rate trend. Aldermore for example are now offering 1.6% on instant access accounts.

At the same time as rates are rising slowly, the demand for credit is rising quickly. Consumer credit is expected to rise over 7% next year. Having already risen by 5% so far this year. This is in response to the increasing costs of living. Demand for credit had fallen back in 2020 and 2021 for the first time in years.

Worryingly though, people are still starting to postpone or reduce their pension contributions in response to the squeeze. Up to 25% have already done this, according to research by Charles Stanley.

We will continue to keep an eye on the rates.

Independent Financial Advice

Christina Clegg Financial Services explains the benefits of using an Independent Financial Adviser.

If you have any questions about Investment advice or savings rates please feel free to give us a call on 01282 614444 or drop us an e mail to

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