By Aisling Finn on Tuesday 24 March 2020
The Bank of England reduced the interest rate down to just 0.1 per cent last week to cope with the coronavirus outbreak.
Hargreaves Lansdown, one of the UK’s most popular trading platform for private investors, will stop paying interest on cash held in investment accounts on its platform.
The move was announced at the end of last week after the Bank of England slashed interest rates again from 0.25 per cent to just 0.1 per cent to help bolster the economy through the coronavirus pandemic last Thursday.
In an email sent to customers seen by AltFi, the investment platform said: “To reflect the changes to the Bank of England’s base interest rate, from 19 March 2020 we will no longer be paying interest on cash held in any Hargreaves Lansdown investment account.”
Hargreaves Lansdown is the leading investment platform for retail investors in the UK terms of assets but a number of fintech firms, as well as Goldman Sachs' Marcus platform, have put the savings markets at the core of their growth strategies.
Despite the dramatic reduction of the Bank of England’s interest rates, other investment platforms are either unmoved or even increasing rates.
OakNorth, the SME alternative lender, has said that it is actually increasing the interest rates for its fixed-term savings products.
A spokesperson for the bank said: “Customers need to keep saving – hopefully, this will encourage them to do that!”
A spokesperson for Marcus by Goldman Sachs did not specify what the firm would be doing in light of the interest cuts.
“We regularly review our pricing in the context of the rest of the market and are considering our options following the Bank of England announcement," they said.
Moneybox meanwhile was approached by AltFi for comment but it said it didn’t have the information available yet.
Earlier this year, 11:FS' Amy Gavin, who is a market researcher at 11:FS’ Research & Benchmarking Team, said: “New entrants, such as OakNorth and Marcus, are gaining significant traction due to their ability to better meet customers’ needs with convenient, digital-first solutions.”
“The range of savings products will widen as a variety of new and innovative services enter the market, driven by technological advances and strong consumer demand for digital-first products.”
This significant step down from Hargreaves Lansdown may prove an opportunity for digital-only savings platforms to gain further market share from incumbent banks amid the economic upset caused by the coronavirus.