A major investigation will be triggered today into cash Isas which are robbing savers of up to £3billion a year in interest.
Britain’s consumer champion is demanding a probe into the tax-free nest eggs, which it says are ripping off millions of savers by keeping them in accounts with meagre interest rates.
Consumer Focus will lodge a ‘super-complaint’ with the Office of Fair Trading highlighting the unfair treatment from banks and building societies.
Around 15million people have a cash Isa, which lets them save up to £3,600 a year into tax-free accounts. The figure is rising to £5,100 a year from next month.
In total, hard-working families have poured £171billion into the popular accounts since they were launched in 1999. But Consumer Focus warns savers are being penalised by a system which is unfair, inefficient and costs them a fortune.
Banks and building societies are specifically accused of:
* Luring savers into deals which have a big ‘bonus’ rate for the first year – but a low rate afterwards
* Blocking savers from moving from one account with bad interest to a better one in the same bank
* Dragging their heels and taking weeks, months or up to a year to process an application to quit for a rival firm offering a better rate
* Paying no interest on a cash ISA stuck in limbo in the transfer process between two firms
* Sending out statements which are so baffling it is difficult to work out the interest rate being paid
* Paying a worse rate on their taxfree accounts than they do on their other accounts
It comes as official figures show the interest paid to savers has dropped to its lowest level since records began in 1987. Last year, the total amount of interest paid to savers halved from £39billion in 2008 to £19.2billion.
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