2.3m Brits switching savings accounts in search of safety, says Abbey

10 October 2008 / by Rachael Stiles
More than 2.3 million Brits have already switched savings account providers search of a safe haven for their money, according to new research from Abbey.

As banks topple around the world and savers fear that the money they have diligently put aside in savings accounts could be lost, Abbey has found that many people are taking matters into their own hands and seeking out somewhere to put their money where it is less vulnerable to the credit crisis.

A total of 12.1 million people have switched savings accounts, Abbey found, either in search of more security or simply a better rate.

As a reflection of the Government guarantee which limits protection for savers' deposits to £50,000 per account, 1.5 million, or 13 per cent, of worried savers who have switched are opting to spread their money between more than one savings account to spread the risk.

It is nearly impossible to predict which bank could be hit next by the troubles in the financial markets, especially because the stability of foreign banks can also affect British savers who have money saved in one of their UK subsidiaries, such as Icelandic bank Landsbanki's UK online savings account provider, Icesave.

Despite this, however, Abbey's research found that seven per cent of switchers are still considering the apparent financial strength and reputation of a savings account provider before they decide where to put their money.

Research has shown that savers are increasingly opting for banks that are perceived to have resilience to the credit crisis, rather than those which are offering the best interest rates.

The average saver has a deposit of £15,117, Abbey's research revealed, but eight per cent of savers (3.3 million) have more than £50,000 in savings, so because the Government's Financial Services Compensation Scheme only protects the first £50,000 in one account, they would do well to protect themselves by spreading it over a number of accounts.

Savers who do spread the risk should be aware of which licence their providers come under. Some, which are owned by the same group, come under the same licence, which means that savers with money in both might still only get one £50,000 pay out.

However, there are others that are owned by the same group but come under different licences, so both accounts would be protected up to £50,000 each, so saver should always check how much protection they would have.

"It's clear that there is a flight to safety as savers are certainly thinking more carefully about where they place their money, and choosing institutions based on their financial strength." comments Reza Attar-Zadeh, director of Abbey savings accounts and investments.

"Abbey has seen a marked increased in savings inflows in recent weeks," she continued, "up 270% in our branches network alone due to our strong financial position, backed by the financial strength of a top 10 global bank, Santander"

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