10/01/13
Savers have been dealt a further blow as provider Governor Money announced it has stopped accepting new customers and closed its book for further deposits from existing ones.
The provider, which has previously been handed an award for innovation in bringing something new to the savings market, blamed a new Government scheme designed to encourage lending for causing a paucity of savings products.
Governor Money, which is owned by the mutual Family Investments, came into being in April 2011.
The company has acted as a "middle man", offering savings accounts and ISAs from several different providers through one single account online, many provided by smaller building societies.
Confirming that it has stopped accepting new customers for the "foreseeable future", Governor Money said the Government's Funding For Lending scheme had a big say on the market in recent times. The multimillion-pound scheme, launched in August, had led to "a scarcity of good products to offer" in the savings market.
Funding For Lending gives lenders access to cheap finance which they can then pass onto borrowers. Some commentators have said that it makes lenders less reliant on attracting deposits from customers.
Savings rates have dropped over the past few months, with Moneyfacts saying that an average one-year bond pays 1.96 per cent, as opposed to 2.77 per cent last year.
Governor Money's chief executive Miles Bingham said that the provider had been a "truly innovative and unique" service, and lamented that it was having to take such a measure. He said Governor's continuation was "unviable" given the lack of appealing rates on offer to savers from the big banks and building societies.
The firm has categorically stated that it has not gone under, and existing customers' investments are safe, with cash held by the product providers, all of whom are guaranteed by the Financial Services Compensation Scheme.
It says customers will still receive the same level of service, and can take their money out once their products have matured.
