Are my Santander savings safe?

The news that Santander has had its credit rating slashed by credit agency Moody's will alarm many British savers. With good reason - Santander has around 25m UK customers.

In Spain, some depositors have already started withdrawing their Santander savings. So, how worried should you be?



Rush to the ATM?

First, let's separate Santander UK from its Spanish owner. Santander UK remains an autonomous operation with the vast majority of its assets - 90% - being UK based. It's also highly unlikely the UK operation would be expected to support the parent operation back in Spain.

UK savers themselves are wrapped in plenty of insulation thanks to the Financial Services Compensation Scheme (FSCS). Cash deposits of up to £85,000 per person per financial operation are guaranteed by the Government. Beyond that (substantial) limit though there is no further protection for your cash savings.

£85,000 guaranteed

Bear in mind that if you have cash across Santander's subsidiaries such as Cahoot, the £85,000 cover is guaranteed per institution rather than per subsidiary. If you're deeply embedded across Santander Group's product operation, some may feel more comfortable with a bit of re-trenching. But there would be no logical reason to do this, given Santander UK's solid base.

"The essential point to note is that the change to Moody's credit rating of Santander UK plc has no impact on our businesses in the UK or our plans for future growth," said Santander in an emailed statement to AOL Money. "There is no issue for customers. Santander UK plc is an autonomous subsidiary of the Santander Group...and [has] a Eurozone sovereign exposure of less than 1% of assets."

Mortgage rate hike?

It's also highly unlikely the FSA would allow Santander to support its parent arm, even if Santander Spain wanted it to. Whether the Santander downgrade will significantly affect its borrowing costs - for example, if you're looking for a mortgage or are stuck on a Santander SVR - remains to be seen. But costs are not likely to rise by much currently. Longer term, this may be more of an issue.

"No panic stations at the moment," says David Hollingworth from London & Country Mortgage brokers. "Santander UK is strong. But if the worse did happen, you mortgage would continue. In terms of pressure of lending costs, all lenders are dealing with rising funding costs and a number have moved [up] their SVRs."

Currently Santander's SVR is 4.24%. "But there are no guarantees, ad infinutum," Hollingworth adds. "A Standard Variable Rate is just that, variable. 4.24% is not very high but you could be doing better by switching."

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Are my Santander savings safe?

More than 46,000 of 106,000 the complaints received by the FOS in the second half of last year related to payment protection insurance (PPI). And the organisation is expecting to receive a record 165,000 PPI complaints in 2012/2013.

The huge numbers are due to the PPI mis-selling scandal that should now be a thing of the past, but there is no doubt that the insurance, which can add thousands to the cost of a loan, is highly unpopular!

(Pictured: Martin Lewis after the PPI payout ruling)

Complaints about mortgages jumped by 38% in the last six months of last year, the FOS figures show, compared to an increase of just 5% in investment-related complaints.

Common gripes about mortgages include the exit penalties imposed should you want to sell up or change you mortgage before a fixed or discounted deal comes to an end, and the high arrangement fees charged by many lenders.

While there is nothing in the data released by the FOS about the number of complaints relating to savings accounts, hard-pressed savers have been struggling with low interest rates for several years now.

You can get up to 3.10% with Santander's easy-access eSaver account, but many older accounts are paying 1.00% or less and even this market-leading offer includes a 12-month bonus of 2.60% - meaning that the rate will plummet to just 0.50% after the first year.

Banks are imposing the highest authorised overdraft interest rates since records began, with today's borrowers paying an average of 19.47%, according to the Bank of England.

A typical Briton with an overdraft of £1,000 is therefore forking out around £200 in interest charges alone. Coupled with meagre returns on savings, it's enough to make your blood boil!

While authorised overdrafts may seem expensive, going into the red without permission will cost you even more due to huge penalty fees.

Barclays, for example, charges £8 (up to a maximum of £40 a day) each time that there is not enough money in your account to cover a payment.

If you need to send money abroad, the likelihood is that your bank will impose transfer charges - and offer you a poor rate of exchange. Someone transferring a five-figure sum could easily lose out by £500 or more as a result.

The good news, however, is that you can often get a better deal by using a currency specialist such as Moneycorp.

Automated telephone banking systems, not to mention call centres in far-flung parts of the world, are one of our top gripes - especially as we often encounter them when we are already calling to report a problem.

In the words of one disgruntled customer: "What is it about telephone banking that turns me into Victor Meldrew? Well, maybe it's the fourteen security questions, maybe it's the range of products that they try to push or maybe it's because I'm forced to listen to jazz funk at full volume while my phone bill soars.

"Actually though, I think it's because the people I eventually speak to rarely seem able to solve the issue I'm calling about."

The days of a personal relationship with your bank manager are long gone - for the huge majority of us at least.

When ethical Triodos Bank investigated recently why around 9 million Britons would not recommend their banks to a friend or relative, it found that almost a third felt they were not treated as individuals. Another 40%, meanwhile, were simply disappointed with the customer service they received.

When you're in a rush, the last thing you want to do is wait in a long queue at your local branch.

Researchers at consumer champion Which? recently found that most people get seen within 12 minutes, but you could have a much longer wait if you go in at a busy time. Frustrating stuff!

The Triodos Bank research also indicated that the bonus culture that ensured the bank's high-flying employees received large salaries, even when it was making a loss at the taxpayer's expense, was hugely unpopular with consumers.

About a quarter of those who would not recommend their current banks said this was the main reason why. And with RBS executives sharing a £785 million bonus pool despite the bank, which is 82% publicly owned, making a loss of £2 billion last year, it's not hard to see why.

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