NS&I moves to stem customer deposits - Savings - News - Moneyfacts

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NS&I moves to stem customer deposits

NS&I moves to stem customer deposits

Category: Savings

Updated: 25/01/2012
First Published: 25/01/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

National Savings & Investments (NS&I) has cut the rate of its main savings account to stem deposits made by customers.

The Government-backed provider said it had cut the rate of its Direct Saver from 1.75% to 1.5% to make it less attractive after it revealed it had more than doubled its savings target.

NS&I is given a yearly financing target by the Government, which was set at £2 billion for 2011/12; however by the end of the December it had already raised £4.8 billion.

As a result, it has cut the rate of its Direct Saver, admitting the decision was taken to 'moderate the level of deposits into this account'.

"Since November we have seen an increase in customer deposits," explained Jane Platt, chief executive, NS&I.

"This has been driven by a relatively small number of savers depositing large amounts of money, particularly into our Direct Saver account. We have also seen a decrease in the number of customers withdrawing their money from products across our range.

"Reducing the rate on Direct Saver was a very difficult decision. However, we have to take action to try and moderate the level of deposits into this account over the coming months."

Because of its backing by the Government, the savings institute is very popular with consumers because of the security of their funds.

But NS&I's ability to attract substantial savings has raised the ire of other providers, with the Building Societies Association long complaining that its members are at a disadvantage.

As such, NS&I often withdraws accounts once they are subscribed to a certain point.

This was seen on more than one occasion last year, with its inflation-linked bond taken off the market after just four months.

The account proved hugely popular at a time when inflation was more than double the Government's target of 2%, with around half a million people depositing savings into the bond.

In addition, NS&I pulled its Investment and Easy Access accounts in November.

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