Santander has pulled its top 5.2pc savings deal from the market a little over a week after it launched.
The bank unveiled its easy-access account paying 5.2pc on savings up to £250,000 for 12 months on Sep 4 – the best easy-access savings deal for 14 years.
Experts praised the move at the time, welcoming a market-leading rate from a high-street bank following months of pressure from the financial regulator and the Government for the big brands to match the deals of small rivals.
But Santander said it will now pull the account at midnight on Tuesday, just eight days after launch, following “significant demand on the limited edition product”.
From Wednesday it will offer easy-access savers a rate of 2.5pc instead – less than half the annual interest previously on offer.
Martyn James, a consumer expert, said Santander’s decision to pull the deal at short notice shows how “inconsistent” the banks had been with rate rises.
He said: “Once again, the decision to close yet another beneficial rate of savings interest on an account early demonstrates just how jittery and inconsistent the industry is about interest rates that benefit its customers – particularly when a deal is popular.
“Compare that to the glacial pace that the same banks increase savings interest rates and it becomes apparent why the Government and regulator are so concerned about interest rates and the high street banks.”
When Santander first launched the 5.2pc “Limited Edition Easy-access 3” account it told savers they had until Sep 17 to apply, although it did warn the account could be pulled sooner.
At the beginning of June, the average easy-access rate sat at just 2.21pc, less than half of the current central interest rate. It has now breached the 3pc threshold, according to financial analysts Moneyfacts.
High-street banks have been raising rates after the City watchdog, the Financial Conduct Authority, threatened to take “robust action” against those that failed to offer customers fair value.
Around £1.5 trillion is currently stashed away in savings accounts, excluding NS&I accounts, according to the FCA.
However, some £250bn is sitting in accounts that earn savers zero interest, despite the fact that the Bank of England has increased rates 14 times since December 2021 to hit its current high of 5.25pc.
The financial regulator has set out a 14-point action plan to push banks to offer customers a better deal on the savings.
Since it outlined the action plan in July, the FCA said it had seen some savings providers respond by improving rates. “We welcome the development of a more competitive market and encourage people to shop around for the best deal,” a spokesman said.