Silver Saver accounts could be bannedPosted on: 14 May 2009 by Gareth Hargreaves
Silver savings accounts aimed at older savers could be banned under a new law, if ministers do not step in to alter it this month.
The accounts, mainly run by building societies for the over-50s, fall foul of the new Equality Bill, which will have its second reading in the House of Commons next week.
The Bill extends the ban on age discrimination from employment to the provision of services, as well as bringing together all existing anti-discrimination laws covering equal pay, sex, race, disability, religion and sexual orientation.
As a result, banks and building societies may be prevented from treating some savers preferentially to others, including offering accounts aimed at older savers.
However, a minister has the right to alter the bill to make exceptions to the law in certain circumstances if they take up the opportunity during its reading on Tuesday.
The Building Societies Association, which represents all 53 building societies in the UK, is urging the Government to step in to retain a product which it believes is invaluable to many of its members.
As pensioners have seen their incomes diminished over the past year, due to falling savings rates, the BSA argues this is the worst possible time to ban a product that supplies them with simplicity, regularity and relatively high rates.
Adrian Coles, director-general of the BSA, says “It concerns us that this legislation could result in the loss of an account that meets the important social need of older savers.
“Whilst we support efforts to outlaw unjustifiable age discrimination, we believe these accounts - like children's accounts - have a legitimate role to play.
“The Government themselves acknowledged in the recent Budget, by increasing the ISA limit for those over 50 ahead of the rest of the population, that older savers have suffered, so it would seem at odds with their policy to outlaw this product.”
Societies could not afford to extend the silver saver offers to all their members and would therefore be forced to close the accounts if the bill is introduced unaltered, the BSA points out.
It argues also that the 'Treating Customers Fairly' rules of the City watchdog, the Financial Services Authority, calls for financial products and services to meet the need of certain consumer groups, which the silver saver accounts target.
However, accounts for older savers are not offering rates higher than other accounts in the market at present. The two best senior accounts on the market, Leeds Flexible Freedom and Chelsea Senior Savers offer rates of 2.25% and 1.5% respectively. These are branch-based accounts, which are preferred by the majority of older savers.
These accounts for older savers' rates are better than general branch-based accounts, but are slightly behind the best internet account on the market from Indian bank ICICI at 2.45% and the best one-year fixed-rate bond from West Bromwich at 4.3%.
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