FLS decimating the savings market
Sylvia Waycot, financial expert at Moneyfacts.co.uk, said the immediate knock-on effect has been the collapse of savings rates across easy access, notice accounts and fixed bonds.
She said: “The devastation hasn’t been limited to just the providers who have joined the FLS.
“Providers that have developed a strategy to provide accounts that, whilst not necessarily offering top rates, preferring instead to offer rates that are consistently good, have suddenly found they are topping the best buy tables.
“This has caused those providers to also slash their rates to regain middle table rankings. And so it goes on and on…
“All this constant movement in rates has prompted some providers to withdraw their products from the market entirely.
“For example, FirstSave, which is not participating in the FLS, reduced its 1-year fixed yesterday morning and by afternoon had withdrawn the product from sale.
“Funding for Lending is bad news for savers, but is it good news for borrowers?
“As yet, we are still waiting to see any increase in the number of high loan-to-value mortgages on offer. Rather than kick-starting the mortgage market, it would appear that the only lending is still to the less risky remortgage bracket.
“Where does this leave savers? It leaves them in free fall without a shred of hope for a soft landing.”