Friends Life is urging corporate platform providers to resist adopting ‘bait-price’ interest rates, commonly used to attract customers to cash ISAs.
The provider believes that over the long term, introductory interest rates that fall after a fixed period will undermine the efforts of corporate platforms in encouraging employees to save.
Friends Life – whose corporate platform is set to launch this summer – argues that reducing interest rates will leave many employees with diminishing returns. Employees could potentially lose the benefits of a workplace platform solution if they are forced into moving their ISA around. Instead, the company believes platform providers should offer a solid, consistent interest rate that provides on-going value.
Dan Hawkins, Corporate Platform Proposition Manager, Friends Life, commented:
“The concept of ‘bait-pricing’ strays from the principle aims of a corporate platform – to give financial security for employees at all stages in life, and to provide enviable workplace savings for employers to reward and retain their staff. Unless platform providers offer sustainable interest rates, employees will be disadvantaged for continuing to make use of the benefits of a corporate ISA.”
With only 31% of people regularly moving financial products and providers according to new research from Friends Life, the company believe it is vital that employers and employees understand how the value of their ISA will be affected over the long term by reducing rates.
Dan Hawkins continued:
“Many consumers are naturally drawn to dazzling introductory rates. But corporate platforms offer a timely opportunity to educate people in seeing beyond the big numbers, to grasp how to make the most of what remains a valuable, tax efficient savings product.
It is particularly important – in light of continuing economic unease – to instil confidence and certainty when it comes to saving. Good, reliable interest rates and better financial education should replace bait-prices as the new headline-maker.”
Source : Friends Life Press Release
