Lloyds Banking Group scrapping 47 savings accounts

Lloyds has axed 47 'historic' savings accounts over its three banks, leaving some customers worse off.

Lloyds Banking Group is getting rid of a whopping 47 savings accounts across Lloyds, Halifax and Bank of Scotland in a 'simplification' of its product offering.

Lloyds Bank and Halifax customers will automatically be transferred to a new account in 2015, all of which pay a miserable flat interest rate of 0.25%, with Bank of Scotland to follow in 2016.

Halifax customers

Halifax Cash ISA customers will be moved to the new Instant ISA Saver, while Easy Access account holders will be moved to the Web Saver Variable or Instant Saver, depending on whether they manage their account by phone, web or in a branch.

Here are the accounts that will disappear.

Accounts to be axed	Current interest rates (AER)
Instant Saver	0.2% (£50+)
Guaranteed Saver	0.5% (£2,500+)
Premium Savings Direct	0.2% (£25,000+)
Everyday Saver	0.5% (£1+)
Reward Saver	0.5% (£1+)
Variable Rate Web Saver (with cash card)	0.25% (£1+)
Online Saver (Standard rate)	0.2% (1+)
Web Saver Extra	0.95% (£1+)
ISA Saver Direct	0.5% (£1+)
ISA Saver Online	0.25% (£1+)
ISA Saver Variable	0.5% (£1+)

Lloyds customers

Lloyds’ new accounts are the Instant Cash ISA, Online Saver and Standard Saver.

Here are the accounts they're replacing.

Accounts to be axed	Current interest rates (AER)
Advantage Saver	0.2% (£1+)
Easy Saver	0.75% (£1+)
Exclusive Saver	0.1% (£1+)
Flexible Saver	0.1% (£1+)
Gold Saver	0.1% (£1+)
Instant Access Saver	0.1% (£1+)
Instant Gold	0.1% (£1+)
No Notice Saver	0.1%
Platinum Saver	0.1% (£1+)
Premier Saver	0.1% (£1+)
Regular Savings	0.1%
Select Saver	0.1% (£1+)
Standard Saver	0.1% (£1+)
Online Saver	0.1% (£1+)
Internet Saver	0.1% (£1+)
eSavings	0.55% (£1+)
Cash ISA	0.41% (£1-£21,000)
Cash ISA Saver	0.55% (£1+)

Bank of Scotland customers

Again, these Bank of Scotland accounts won't disappear until 2016.

Accounts to be axed	Current interest rates (AER)
Access Cash ISA	0.5% (£1+)
Access Saver	0.5% (£1+)
Exclusive Saver	0.5% (£1+)
Instant Access Savings	1% (£1+)
Internet Saver	0.2% (£1+)

Losers, but some winners too

Lloyds Banking Group claims that two-thirds of its 30 million customers will either benefit from a higher rate or earn the same as they do now. As for the other third, their income may drop quite significantly.

One of the most pertinent examples is the Halifax Web Saver Extra which will fall from its current 0.95% interest rate. The customers of this account have already been the victim of a rate cut in the last month, down from 1.35%.

Other customers who have £1,000 in savings will see a loss of 25p per month, while the average customer who has £4,000 saved will lose £1 a month.

How the transition will unfold

Lloyds will be writing to all customers affected at least two months in advance starting next week, with the whole process taking place in stages over the next year. The first wave of customers are expected to be moved in February.

Any restrictions on withdrawals will be removed so that customers can move their cash more freely.

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Why is this happening?

There has been over 1,022 rate cuts on savings accounts this year on top of 1,462 last year.

This move from Lloyds has come about after Barclays scrapped 20 old savings accounts earlier this month and 'simplified' 11 instant access cash ISAs in August. The latter saw 1.6 million customers put on a worse rate.

Virgin also cut rates on a number of its key savings accounts and ISAs in April this year.

And it's almost certain this savings account streamlining is because the Financial Conduct Authority (FCA) is carrying out an investigation into the UK cash savings market.

Back in July, the financial regulator found that banks and building societies pay lower interest on older accounts because savers often don’t move on to a better deal. So you could argue that financial retailers are having a spring clean of sorts ahead of potential regulatory action.

The FCA's final report will be published in January 2015.

Are you winning or losing out as a result of these changes? Tell us in the Comments below.

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