SOS campaign calls for a million savers to back its plea

By JO THORNHILL
Updated:

Save Our Savers, a lobby group set up to fight on behalf of 30 million savers in Britain, is planning to petition Downing Street and hopes to get one million signatures in support.

Peter Duckworth, 70, a retired entrepreneur from Reigate, Surrey, has put £500,000 into founding SOS. He hopes the petition will demonstrate to the Government that the group has a strong voice and that the views and concerns of savers should start to be taken seriously by politicians.

Among its main aims, SOS, which says it is non-political, wants savers to receive the first £5,000 of any interest tax-free. This is on top of the annual cash Isa allowance that means the over-50s can save £5,100 in a tax-free wrapper - the under-50s have a lower allowance of £3,600, although this will rise to £5,100 in April from the start of the new tax year.

piggy bank

Growth: Lobby group SOS demands that first £5,000 of interest on savings is tax-free

SOS also wants legislation introduced to protect savers from extreme 'rate shock' when savings rates plummet, as happened last year. It would also like to see politicians come up with long-term policies on savings.

Duckworth, who made his money with pharmaceutical and health food businesses, wants to sign up a high-profile celebrity, such as internet entrepreneur Martha Lane Fox or actress Joanna Lumley, as a figurehead for the group.

'Savers are vital for the economy and the fabric of society, but there has never been a place where they can unite to fight for their particular interests and have a shared voice,' says Duckworth.

'Government must take a longer-term view when it comes to policies on savings and improve both the protection and incentives available for savers.'

The launch of the SOS petition comes at a time when millions of savers are under pressure and struggling to earn a real rate of return from their cash in the face of historically low interest rates and rising inflation.

Rachel Thrussell, savings expert at independent data compiler Moneyfacts, says conditions remain bleak for cash savers, with typical instant access branch-based accounts usually paying between 0.1 per cent and 0.5 per cent.

She says: 'With many savers under intense financial pressure it is vital to look at different options even if this means tying up cash in a fixed-term bond or taking an account with a short-term bonus or restrictions on withdrawals.'

Savers can achieve more than five per cent gross if they are prepared to take a five-year fixed-rate bond. The best providers currently include Aldermore, State Bank of India, Birmingham Midshires and Saga.

But Thrussell accepts that such a product will not suit many savers. 'No one knows what the future holds at the moment. Fuel and food prices are going up, pension increases are being frozen and the jobs market is still uncertain,' she says.

'Unless savers have a lump sum which they know they won't need to touch for five years, most prefer short-term savings bonds or savings accounts with instant or near-instant access.'

The best three-year fixed bonds are currently paying between 4.5 per cent and 4.7 per cent gross while the best two-year deals pay about 4.2 per cent. In contrast, over one year the best rate is 3.65 per cent - with Nigerian-owned bank brand FirstSave.

While some consumers may worry about the security of some foreign-owned savings providers, a number of these organisations are covered by the Financial Services Compensation Scheme up to the £50,000 limit. They include State Bank of India and First-Save.

Customers of some EU-based banks such as ING Direct and Bank of Cyprus are not covered by the FSCS but by compensation schemes elsewhere in Europe. For further details, visit thisismoney.co.uk/safe-savings.

Cash savers should always use up their cash Isa allowance first before other savings products as interest is paid tax-free. The best rates are currently being paid on fixed-term Isas, such as 3.6 per cent with Aldermore or 3.5 per cent with Nationwide Building Society, Santander Bank and Saga. 

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