Savers: Act now to ensure you get the best interest rate, says JEFF PRESTRIDGE

Thursday is likely to see another hike in base rates – to 5.25 or even 5.5 percent – ​​as the Bank of England battles against the economic evil that is inflation. A war for which it was ill-prepared and which it has yet to win. Heads will roll, that’s for sure.

Higher interest rates are bad news for many borrowers. But for savers, they offer the opportunity to earn a juicier income stream.

Savers must therefore seize the moment and ensure they maximize returns.

Accept nothing less than an interest rate of four percent plus on easily accessible accounts.

> Find the best low-threshold savings rates here

While cash reserves look attractive as interest rates rise, they shouldn’t be the only piece of your financial arsenal.

If you want to build wealth over the long term, you should also look into other income-producing assets such as stocks and bonds – preferably in the tax-friendly packaging of a retirement or individual savings account.

Equities in particular offer the opportunity to benefit from an attractive mix of income growth and capital return over the long term.

The case for equity income – and with it implications for equity investing – was very strongly defended a few days ago by investment manager Janus Henderson when he released data on global dividends paid by companies last year.

According to his analysis, global dividends will increase by more than 20 per cent in 2022 to a total of £1.26 trillion. While it is more conservative for the year ahead – mainly due to concerns about the health of the global economy – it still believes dividend growth should be in the order of five percent in 2023.

Attractive as the numbers are, the argument that hit me like a laser between the eyes was that of Janus fund manager Ben Lofthouse in support of equity income and equity investments.

Lofthouse, manager of investment fund Henderson International Income, says there is “major opportunity cost” for people “to flee to the perceived safety of cash.”

He adds: “Not only is today’s high inflation (7.9 per cent in the UK) causing savings to continue to lose purchasing power incessantly, but stock prices typically rise sharply when markets assess that the global interest rate cycle has turned from rises to cuts.

“No one knows exactly when that will happen, but when it does, it will move so quickly and will mislead those who choose to sit on the sidelines.”

He concludes: ‘Dividends are a crucial piece of the puzzle. Of course they mean real money for investors year in, year out, but the fact that they grow is the real key to building wealth.”

Beautifully set. In short, if you want to build wealth over the long term, keep investing through thick and thin – preferably on a regular monthly basis and through a portfolio of funds or exchange-traded mutual funds that spread your risk across both markets and equities.

And if you want to take advantage of the crucial piece of the investment puzzle, which is growing dividends, take a look at the income seeker section of the Association of Investment Companies website. Ideas enough.

Open the door for more bank hubs to open

I am confident that Cash Access UK, the organization responsible for overseeing the introduction of banking hubs, will respond positively to calls for greater flexibility in hub location rules.

Currently, hubs – managed by the post office and providing services to all bank customers – can only be set up in a city where ALL banks have closed their branches. But EVERYTHING involves building society across the country.

So if Nationwide still has a branch in the city, no hub can be set up.

This is despite the fact that the company does not offer business accounts, so it is not an option for a retailer looking to withdraw cash. Nationwide also does not provide charitable or club accounts.

Open to everyone: Hubs provide services to customers of all banks, in one location

Harpenden Town Council in Hertfordshire believes this rule is unfair. The city, home to more than 30,000, will lose its last bank (Barclays) in September and is desperate for a hub. But the presence of a part-time rural branch in the city prevents this.

In a letter just sent to Derek French, a longtime campaigner for shared bank affiliates, Nationwide says it doesn’t want to (unintentionally) block access to cash for small businesses or charities.

As a result, it fully supports setting up hubs in towns like Harpenden, where it remains the last ‘bank’. The letter states that his greatest wish is for local communities to ‘thrive’.

If only the big banks thought the same. Good on you, Country. The council is now planning to contact Cash Access UK to see if Harpenden could be used as a ‘pilot’ for a hub in a community where the last ‘bank’ is Nationwide.

I hope that the organization responds positively to this request. It would open the door for more hubs to be introduced into communities that deserve them.

Excellent customer service puts banks to shame

Just spent a week in the Lake District. For the most part, the sun has shone – such a great miracle if the Financial Conduct Authority Consumer Duty rules ever work.

What do I love about Ambleside, my base, apart from the surrounding hills?

Best foot forward: Outstanding customer service from local businesses puts banks to shame

It’s the excellent service you’ll receive – from the smiling tax collector who pours you a delicious pint of local ale, to the bed and breakfast landlady who’s willing to take the time to show you the perfect spot for some wild swimming (thanks you Tina from Wanslea Guest House).

No wonder the banks have long since left the city. They don’t fit. Customer service? They would have no idea but to suggest that you interact with a bot.

Fairer deal on finances? Little chance

New rules will be introduced tomorrow to ensure that the country’s financial services companies deliver good and fair results for clients.

Good chance of success, I say, as previous initiatives by the city regulator – ‘treating customers fairly’ – ended in dismal failure.

The so-called ‘Consumer Duty’ rules are introduced by the Financial Conduct Authority (FCA), and are well-intentioned on paper.

They aim to create a Utopia-like financial world where customer-friendly products and great service are the norm, not the exception. Honesty, value for money and ongoing customer support, we are told, will come as a matter of course.

Maybe I’m being too cynical, but I don’t see how the FCA – with the help of these rules – can bring about this turnaround in the behavior of the financial industry without devoting huge new resources to monitoring what companies are up to.

These additional resources will cost money – which will be passed on to companies through increased fees and then to customers. I fear that the only result of these new rules will be a regulatory quagmire.

A good starting point for the FCA tomorrow morning would be to see whether insurance companies’ behavior in setting renewal premiums complies with the new rules.

Currently, people with home or car insurance can contest a renewal premium. Often, but not always, they are offered a better deal (well done).

But how does that relate to the new consumer tax rules? It’s a question Ian Hughes, CEO of Consumer Intelligence consultancy, posed with me last week.

He says: ‘If an insurer is willing to change the price for one group of people (those who call and complain) and not for those who don’t, then at least one of the prices may not be fair value.

“The bottom line is that they (the offending insurers) should face the wrath of the regulator. Everyone should get the same, fair price.’

Absolute. I await a response from the FCA with bated breath.