Savers are far more cautious after Northern Rock scare

Consumers are exercising far more caution about where they put their savings, says Jim Spowart of Peopleschampion.com, the Scottish price comparison site which celebrates its first anniversary this week.

“Many people – especially older people - are being much more cautious with their money. They have been bitten first by the pension crisis, and now Northern Rock, so instead of going instinctively for the highest return, they are looking more at safer havens where they know their money is secure.”

This is in spite of the Bank of England’s assurance which guarantees savers will get 100% of their funds back in the event of a bank collapse.

Peopleschampion.com, which has handled over 275,000 customers in its first year of operation, conducted a straw poll of Northern Rock savers standing in the queues.

“We were able to ask one question: ‘What do you intend to do with your money now?’ The one clear answer from the majority of people we talked to was that consumers are looking for safety, rather than the best interest rates,” said the Peopleschampion.com chairman.

Jim Spowart spoke of strong anecdotal evidence that customers were taking their hard-earned savings along to larger institutions such as the clearing banks: for example, Lloyds TSB, RBS, Barclays, HBOS, and the larger building societies such as Nationwide, and on a local level, the Dunfermline Building Society.

“What we have seen is savers eschewing the best rates to make sure that their savings are safe. This might well be a temporary position, but I think it shows the importance of rebuilding consumer confidence. I don’t think this is going to go away for a while though.”

Peopleschampion.com found older customers are more knowledgeable about a bank’s exposure to the risks in the market and unwilling to chances with their savings.