It's just high street robbery

The Bank of England has lifted its base rate by 1.25 percentage points from a low of 3.5 per cent last November to 4.75 per cent today. But some banks and building societies have behaved shabbily and only passed on some of this rise to their loyal customers.

Savers had a rough ride during the period of very low interest rates last year. Most banks and building societies passed on each successive 0.25 percentage point base rate cut to savers in full, as rates fell from 6 per cent in 2000 to 3.5 per cent. So have they now passed on rising rates in full? Not a bit of it. In some cases they have passed on just three-quarters or less of the cumulative rise in base rate since last November. Take a look at our table to see just how little of the base rate rise the savings providers passed on.

At the same time they are wooing new savers with top-paying new accounts while leaving old-style accounts to wither on the vine. This proves that if you want to earn a decent rate on your money, you must keep a close eye on your account. Money Observer's best buys each month may not be the very top rates, but they offer a consistently good deal. We ignore the window dressing of short-term bonuses that temporarily boost the headline rate in favour of those that have paid a consistently good rate or come with a guarantee to move in line with base rate.

Much has changed over the 25 years Money Observer has covered savings accounts. Until the mid-1980s building societies ran a cartel and paid similar rates on a limited range of branch-based accounts. But increased competition and new legislation changed the face of the industry. Some of the giant building societies, including Halifax and Abbey, converted to banks while the number and types of accounts mushroomed.

Easy access accounts paying top rates were launched, often carrying the name Gold, but some of these have become tarnished over the years. Then came postal accounts, telephone accounts and finally internet accounts. At the same time clearing banks joined in, as did supermarkets and new-style banks offering just telephone and internet accounts. The end result is thousands of accounts, some good value and some appalling.

Research by Money Observer shows that some of the largest savings institutions have passed on a paltry 0.8 of a percentage point since last November, against a 1.25 point rise in base rate. Under the Banking Code (the industry's rules on how it should treat its customers) banks and building societies must contact you if you have ?250 or more in an account and the rate has 'fallen significantly' compared with the Bank of England base rate (that is, a reduction of 0.5 percentage points or more relative to base rate in a rolling 12-month period).

Any pre-tax rise of less than 0.75 per cent since November last year, based on a 1.25 point rise in base rate, means your bank or building society must give you at least 60 days to switch to another account or withdraw your money with no notice period or charges. take notice of notices

If you have a branch-based account, a bank or building society does not have to tell you personally about any changes. It can simply put up notices in branches and advertise the changes in a newspaper. On telephone, internet and postal accounts it has to tell you personally within 30 days of changes. It also has to send you a summary of rates at least once a year, unless you have less than ?500 in the account.

The worst offenders over the past year include Bradford & Bingley First Choice and Britannia's Capital Trust 30 and Premier Saver. We list in the table just how much of the 1.25 point rise leading savings institutions have passed on - and the lousy rates they pay loyal savers, most of whom are not even earning sufficient after tax to match inflation of 3 per cent.

Others that have short-changed savers include Halifax 60 Day Gold, Bonus Gold, Liquid Gold and Saver Reward, Abbey Investor 30 and Nationwide CapitalBuilder. Some savers in newer-style accounts, such as cash mini Isas, have also fallen by the way. For example, Alliance & Leicester has passed on just 0.8 points to some of its cash mini Isa savers over the past 12 months. Rates now start at 4.15 per cent on balances up to ?9,000. These savers are getting just 0.05 of a percentage point extra following the 0.25 point rise in base rate on 5 August. A&L's new rates do not take effect until 1 October, a month after most of its competitors.

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