Fintechs Wise and Lightyear have come together to call out Santander’s fake rate increase - and to demand that big banks truly commit to passing on rate rises.

This week, Santander announced a 5.2% rate on its instant access savings account. While a real increase is welcome and overdue, it appears to be a marketing gimmick: the rate is only available until 17th September and “may be withdrawn sooner if there is high demand”.  

Wise and Lightyear are calling on Santander to commit to lasting fair rates, available to all consumers, and for other banks to do the same - rather than follow Santander’s lead by offering similar temporary offers. 

The lasting change is long overdue. Despite pressure from the Treasury Committee, banks are dragging their heels on increasing rates. 

The Central Bank’s rate is at 5.25%, yet Barclays’ instant access account pays 1.66%, Lloyds’ 1.4%, NatWest’s 1.75% and HSBC’s 2%. Prior to its marketing stunt, Santander’s instant access account paid 2.5%. The bank has not said what the rate will be after 17th September. 

What’s more, banks are posting sky-high profits as they pass on interest rate increases to mortgage-payers - but not savers, penalising consumers and small businesses. 

Competition comes from smaller, newer banks and fintech providers. 

Wise offers a service called ‘Wise Interest’ - an investment product that allows savers to invest in a Money Market Fund that provides a return in line with the interest rates offered by central banks. For GBP, the current rate is 4.82%, with Wise’s fee included in the rate. 

Meanwhile, Lightyear offers two options for its users to make the most out of their money in today’s high interest rate environment, offering rates of up to 4.5% interest on uninvested money, and up to 5.54% on investments into BlackRock’s Money Market Funds.

Nilan Peiris, Chief Product Officer, Wise said:

“Banks need to put consumers first, and that means increasing rates. However, marketing gimmicks like this do nothing to help the situation. By keeping rates low, banks are pocketing money that should belong to saving consumers and small businesses. Such practice is always disappointing, but especially so during a cost of living crisis. The sector needs competition and transparency, then rates will become fair. It does not need cheap gimmicks.” 

Martin Sokk, Lightyear’s CEO & co-founder, said: 

“It’s simple — while banks understandably need to make a profit, it should not be at the expense of ripping off everyday people. At a time when the cost of living is becoming unbearable to many, it’s hard to understand how banks can justify keeping so much of what could be passed on to themselves. I believe financial institutions should share the profit they make with customers, whose cash earns them interest — but that is unfortunately not the case today.”