Investments  

‘Banks don’t need depositors so rates won’t rise’

The former Saga director general said banks were now getting their financing through various government schemes so do not need to bring in new customers.

She said: “Nobody really wants savers’ money. They say they feel sorry for people with cash savings, but it is empty words.”

Her comments came as Bank of England governor Mark Carney delivered a speech to an Institute of Directors-backed event in Nottingham last week.

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In his speech, Crossing the Threshold to Recovery, Mr Carney reiterated that rates may not start to rise until 2016 – or until the UK economy is firmly back on track.

He said: “Rates won’t go up until jobs and incomes are really growing. The knowledge that interest rates will stay low until the recovery is well established should give greater confidence to households to spend responsibly and businesses to invest wisely.”

Rates are still at 0.5 per cent, and have been since March 2009. Simon Walker, director general of the IoD, said: “Businesses will take comfort from his commitment to low interest rates and his confidence in the nature of the economic recovery.”

However, Mr Carney also announced there would be more money for banks to lend to business and consumers, with a £90bn loosening of bank liquidity requirements.

In response, Ms Altmann said: “The banks are not fulfilling their normal functions – taking in savers’ money and then using it to lend to businesses or for other purposes to help boost the economy. To attract depositors, they would have to put up interest rates.

“But they are getting cheap or free money from the Bank of England or Funding for Lending. This is bad for savers as they rely on depositing and getting interest on it.”

She added: “Policies that should be designed to help – to bail out people who have borrowed too much, or institutions (the banks) that have lent too much – have ended up seeing savers lose out to those institutions that are seen to be systemically critical to the economy and therefore drive the policy agenda.”

Adviser view

Ashley Clark, managing director of Staffordshire-based Needanadviser.com, said: “Mr Carney is still seeking to reassure markets by reaffirming the Bank of England’s policy decision to link interest rates to unemployment so that we all have a clear view of when and if interest rates will rise. Stability is key and he is looking to soothe frayed nerves by giving clear indicators so that businesses can plan for stability rather than uncertainty.”