One of the top bosses at TSB says it is a ‘great fallacy’ that interest rates are important for savers
One of the top bosses at TSB has said it is a ‘great fallacy’ that interest rates are important for savers.
Andrew Davis, customer director at the bank, described a savings rate as just the ‘icing on the cake’ for depositors.
In an internal communication, he said: ‘It is a great fallacy that [the] interest rate is important when it comes to savings. This is wrong.
Out of touch: Andrew Davis, customer director at the bank, described a savings rate as just the ‘icing on the cake’ for depositors
‘What matters is that customers are saving. The interest rate is simply a little bit of icing on top of the cake – the savings are the cake.’
His comments are likely to anger millions of savers starved of returns on their nest eggs. Most banks have slashed savings rates to 0.1 per cent or less since the Bank of England cut the base rate to that level in March.
Davis was commenting ahead of the launch of TSB’s ‘spend and save’ current account. He said the bank needed to encourage customers into the ‘savings habit’.
The bank’s deposit base is 60 per cent funded by savings worth a total of £17.9billion. It can make up to 39.9 per cent loaning the money out to customers in overdrafts.
Mark Brown, general secretary of TSB workers’ union BTU, said: ‘To say that the core interest rate on savings is not important is a slap in the face of the TSB customers with high savings balances.’
A TSB spokesman said: ‘These comments focus on the importance of helping our customers to get into the savings habit. For longer-term savings, we know that interest is important and we offer a range of products that provide this.’