Banking

JEFF PRESTRIDGE: Covid savings pot that comes with a cost

JEFF PRESTRIDGE: You would have thought Covid savings splurge would be good news for building societies – but it has overwhelmed some

Many households are awash with cash squirrelled away during lockdown. There is £180billion of Covid savings currently sloshing around in bank and building society accounts, earning the square root of nothing. 

With lockdown restrictions extended into next month, this figure could grow as people continue to save rather than spend. 

Indeed, if the Government gives employees the long-term right to part-work from home – destroying town and city centres in the process – I imagine personal savings for those opting for home-working will surge even more. Fair? I’m not so sure. 

Money in the bank: Many households are awash with cash squirrelled away during lockdown

You would have thought this savings splurge would be good news for building societies which rely upon a vibrant savings base to offer mortgages to home-buyers. But it has overwhelmed some. 

Leicestershire-based Earl Shilton and Market Harborough have taken the unprecedented step of turning away new savings customers. On its website, Market Harborough says it has done this to maintain its ‘first-class service’ – in other words it doesn’t want to do an NS&I and be so overwhelmed by new savings business that its customer service goes into meltdown. Fair game. 

Over at Earl Shilton, marketing manager Richard Carson tells me the society simply doesn’t have the mortgage capacity (despite the frothy housing market) to fully utilise the flow of money from new customers.

In closing its savings doors, it also allows the society to keep paying existing customers half-decent savings rates. For example, its instant access cash Isa is paying annual interest of 0.45 per cent – 45 times that paid by most banks on the same type of account. So, there’s method in the madness after all. 

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The pandemic has taken – and wrecked – far too many lives. Thankfully, as a nation, we’re edging closer to keeping this nasty virus at bay although, of course, it will take a worldwide vaccination drive before we can say Covid-19 is finally caged. 

Although it’s the elderly who have suffered the most, do spare a thought for those youngsters whose experience of university life has been compromised by the pandemic. 

Many have been forced to study remotely, often doing so while still being forced by their landlords to pay for student accommodation they couldn’t use – an issue we have persistently highlighted. 

Throw in striking lecturers who have just been instructed by the University and College Union to ‘participate in a marking and assessment boycott’ – a move that will result in some graduates being awarded temporary degrees – and you can see why many students and their parents are fuming. 

Selfish lecturers, greedy landlords, many students suffering from mental issues, and tuition fees that no longer offer value for money. It’s a toxic mix that the Government is currently turning a blind eye to. Unacceptable.

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Finally, a warm farewell to two individuals who did much to make the personal finance world a better place for me and you – and at times a more entertaining one (we all need fun in our lives). 

Alastair Hanton, who has died aged 94, was a force for good in the banking world (you can’t say that about many bankers). In the 1960s, he dreamt up the idea of the direct debit, a payment method that still remains popular with most banking customers. 

At National Girobank, later subsumed into Alliance & Leicester, Hanton was also instrumental in establishing a cash machine network (now known as Link) that customers of all banks could use to withdraw cash free of charge. Despite attempts by some banks to break up this network, Link continues to thrive. 

Julian Gibbs, 88, was not as pioneering, but as an investment columnist, a public relations adviser and a one-time financial adviser, he brought joy to everything he did. 

If you ever needed cheering up – and at times in the early 1990s I did – Julian was the person to turn to. A bon viveur who didn’t have a nasty bone inside him. I can hear his booming laugh as I write these words. 

A glass half-full kind of individual? No, a glass full to the brim with bubbles was Julian. Rest in peace my friend. 

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