Mergers between banks and building societies can be detrimental to savings account holders, a new study has found.
Conducted by the Economic and Social Research Council Centre for Competition Policy at the University of East Anglia using data from Moneyfacts, it was found the financial services companies themselves benefit from greater efficiency through mergers, but these gains were not passed on to the customer.
It was found that savings account holders were worse off in terms of interest rate changes when mergers occurred compared to those who didn't have a savings account with a merging business.
One of the researchers, Dr John Ashton, commented: "Retail banking customers gain little from bank mergers and in some cases can lose out from mergers. Consequently, the consumer perspective must be given more consideration when assessing the merits of future potential banks mergers."
The study examined 61 mergers in the UK between 1988 and 2004.
The Post Office has warned savers not become complacent after the recent decision by the Bank of England to freeze the base rate at 5.75 per cent, as it expects the rate to rise later in the year.
Bank and building society mergers are detrimental to savers, research finds
Bank and building society mergers are detrimental to savers, research finds
Wed, 08 Aug 2007
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