SME Savings Tracker reveals banks withheld more than £200m of savings interest
An independent tracker, published today by Allica Bank, has revealed that British high-street banks withheld more than £200m in savings interest last month from SMEs.
By offering poor interest rates, which remain unchanged for months, the big six banks pay SMEs far less than they deserve on their hard earned savings.
The average SME in the UK has around £75,000 of business savings and is offered less than 1.6% interest on average on this balance by the big banks.
Meanwhile, the best challenger bank rate has held steady at 4.33% – a nearly 3% difference, which is the equivalent of £172 a month in additional savings for individual SMEs.
Looking at the whole SME market, the gap in savings rates offered by big banks and challengers means that last month alone big banks withheld around £208m of savings interest from British SMEs. This figure does not even take into account the significant amount of money businesses are keeping in current accounts not earning any interest at all.
Allica’s new SME Monthly Savings Tracker monitors the average savings rates offered by big banks compared to the savings interest rates offered by challenger banks for comparable SME savings products.
It has shown a continued and significant gap between the rates SMEs are offered by challenger banks and their larger, incumbent competition.
This data underpins the bank’s previous research, which found that SMEs are due more than £7.5bn in ‘missing’ savings interest per year, with big banks offering much lower interest rates to smaller firms compared to large companies, and in many cases offering smaller firms no interest at all on their savings.
This growing discrepancy in the rates offered is occurring despite the Bank of England Base Rate remaining steady at 5.25% for 10 months.
Richard Davies, CEO of Allica Bank, said: “SMEs across the country are getting ripped off when it comes to their business savings. By tracking the rates that major banks offer to their small business customers it shows that nothing is changing.
“The Bank of England Base Rate has consistently sat at over 5% for almost a year now, which means there is no excuse for banks not to be passing on better savings rates to their SME customers.
“Seeing the continued stagnation of the rates offered to SMEs just confirms to me that they don’t value their small business customers. It’s an incredibly tricky time to be a business owner in the UK and every penny counts.”
The research tracks the top rates offered every month by the challenger banks and contrasts it against those rates offered by the six largest incumbent providers in the UK – Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander.
Allica Bank has long been calling on the wider banking industry to give small businesses a better deal on their savings, allowing this money to be pumped back into local economies. The firm recently wrote to the Treasury Select Committee (TSC) asking MPs to investigate the lack of transparency in the business savings market and has since launched a campaign – The Great British Savings Squeeze – to tackle the issue, which has seen support from the FSB, IoD and other leading industry bodies. It is calling for people to sign its petition.
