My realisation that we haven’t got it quite right.

Savings rates are the subject of pretty much every discussion I hear or partake in at the moment and I guess that is no surprise when a saver with a base rate tracker product who was earning 5.75% as recently as November 2007 and 5% for the lion’s share of 2008, is now receiving a rather derisory 0.5%. On a £10,000 deposit balance that is the difference between £575 annual interest and just £50.

As a Mutual Building Society our primary job is to protect the safety and security of the cash that our members entrust to us to look after, but secondary to that is also the provision of a return that represents value for money. This is not such an easy task with a base rate to work with of just half a percent.

It is fair to say that we have done nothing more than pass on base rate reductions to our savings products and in some cases have decided not to pass them on in full, thereby improving the relationship of many of our savings rates with base rate; however I have heard enough from members over the last few weeks to suggest that we need to do better in their eyes.

No financial institution can have every one of their products continuously representing the “best buys” in its given category as a strategy such as this would firstly see a flood of new business, followed by an eventual inability to make a profit on the margin between savings and lending, but at our AGM last week members were clear that in some areas we have come off the pace too far (or more likely others have upped their game in the pursuit of new funds) and that, coupled with a few letters that have come across my desk in the last few days have confirmed to me that we need to review things and look to help our members where practical.

There is little point in following unrealistic expectations of a full suite of “best buys” for the reason stated above, my job is primarily to protect member’s capital, not chase transient money with rates to make up shortfalls in balance sheets which one could argue is happening elsewhere. However having conducted a long and robust review today, the executive team here concluded that we need to try harder in 3 core areas: our traditional branch based accounts, our ISA range and our fixed rate bond offerings. We also debated a key theme of finding ways to reward the loyalty of our existing members and as a principle will endeavour to make enhanced products available to those already with us.

Over the next week or so we will increase the rate on our cash build 90 account to make it compete strongly with the best of the traditional high street account. We will also be launching a new fixed rate bond with rate incentives for existing members and we have agreed a new 2 year fixed rate ISA that again will be very competitive and without the small print and tie in of many of the offers from the big banks and we will also have a new online corporate account to help local businesses.

We are also looking to work up some branch and online reward products that will allow instant access, but pay a great rate if no withdrawals are made and finally we debated how as a mutual we should be looking to help those members who are experiencing real hardship as a function of the current economic situation. We will seek council from the likes of Citizens Advice to help us with our thinking in this area.

We can’t please everyone all the time, I am fully aware of that, but I hope those members who have taken the time to offer views will see that where practical Saffron listens and takes action.