Hargreaves enters the cash savings market
Britain’s largest investment platform is offering its own savings accounts for the first time in a challenge to the big high street banks.
Hargreaves Lansdown is launching an easy-access cash Isa today in partnership with the challenger bank Shawbrook, paying 3.45 per cent. While the interest rate is variable, it said it would never pay less than 0.65 percentage points lower than the Bank of England base rate, now 4 per cent.
Customer deposits will be held by Shawbrook, meaning up to £85,000 in any savings accounts with the bank will be protected under the Financial Services Compensation Scheme, but Hargreaves sets the rate.
Mark Hicks from Hargreaves Lansdown said: “A significant amount of savings sits in low-interest or zero-interest accounts with high street banks, while the highest rates in the savings market are often dominated by challenger banks and smaller new entrants who attract clients in with high rates or bonus rates which very quickly drop after the first six to 12 months.”
While the firm, which held £157.3 billion in assets from 1.9 million customers at the end of September last year, according to its latest results, is bestknown as Britain’s biggest fund supermarket, cash savings are an increasingly key part of its business.
Customers held about £12.7 billion in cash in their investment accounts, and another £11.4 billion on the firm’s cash savings platform, Active Savings, which allows savers with large amounts of money to open several accounts with different banks in one place.
Cash was the firm’s biggest money maker last year, with net interest earned on cash held in customers’ investment accounts bringing £260.7 billion in revenue in the year to June 2024. Its net interest margin, the difference between what it paid customers and earned itself, was 2.1 per cent.
In December 2023 the City regulator the Financial Conduct Authority wrote to 42 platforms and pension companies asking how much of the interest they earned from managing customer cash balances they kept to themselves.
Hicks denied the push into savings accounts was due to the FCA’s inquiry.
“It gives us the opportunity to go after the regular saver market and also ensures we can provide consistency to savers who don’t want to switch around all the time into the highest rates.”
Hargreaves Lansdown is launching an easy-access cash Isa today in partnership with the challenger bank Shawbrook, paying 3.45 per cent. While the interest rate is variable, it said it would never pay less than 0.65 percentage points lower than the Bank of England base rate, now 4 per cent.
Customer deposits will be held by Shawbrook, meaning up to £85,000 in any savings accounts with the bank will be protected under the Financial Services Compensation Scheme, but Hargreaves sets the rate.
Mark Hicks from Hargreaves Lansdown said: “A significant amount of savings sits in low-interest or zero-interest accounts with high street banks, while the highest rates in the savings market are often dominated by challenger banks and smaller new entrants who attract clients in with high rates or bonus rates which very quickly drop after the first six to 12 months.”
While the firm, which held £157.3 billion in assets from 1.9 million customers at the end of September last year, according to its latest results, is bestknown as Britain’s biggest fund supermarket, cash savings are an increasingly key part of its business.
Customers held about £12.7 billion in cash in their investment accounts, and another £11.4 billion on the firm’s cash savings platform, Active Savings, which allows savers with large amounts of money to open several accounts with different banks in one place.
Cash was the firm’s biggest money maker last year, with net interest earned on cash held in customers’ investment accounts bringing £260.7 billion in revenue in the year to June 2024. Its net interest margin, the difference between what it paid customers and earned itself, was 2.1 per cent.
In December 2023 the City regulator the Financial Conduct Authority wrote to 42 platforms and pension companies asking how much of the interest they earned from managing customer cash balances they kept to themselves.
Hicks denied the push into savings accounts was due to the FCA’s inquiry.
“It gives us the opportunity to go after the regular saver market and also ensures we can provide consistency to savers who don’t want to switch around all the time into the highest rates.”
No comments:
Post a Comment