Who is new 'best buy' savings provider Aldermore?
A new player on the savings market is Aldermore - but would you trust a new name with your savings?
The firm is offering high rates - but after a year where savings providers with exotic names have hit the wall after offering high rates, and left people concerned for the safety of their money, would you trust a new name?
Daniel Barnes looks at Aldermore and what they offer.
The firm has really hit the market running. Its five-year savings account offers interest of 5.40 per cent.
It also has three and four-year fixed-rate accounts over five per cent, with minimum balances of £1,000. Accounts are run by internet, phone or post.
It also offers a cash ISA at 3.15 per cent, 45-day notice accounts at 2.54 per cent and easy access accounts at 1.50 per cent.
The competition
Best buy data from Moneyfacts.co.uk show Aldermore's four and five-fixed rate accounts are holding up well. West Bromwich tops Aldermore with its E-Bond at 5.45 per cent, while Barnsley also offers 5.40 per cent on its five-year online bond.
On the three-year bonds, Aldermore's 5.05 per cent fix is beaten by Principality's 5.11 per cent bond.
The new bank's one-year bond fails to hit the top five one-year bonds, with West Brom, the Post Office, Bank of Ireland, Northern Rock, Derbyshire and Chelsea all offering deals over 3.75 per cent.
On the instant access account market, West Bromwich offers 2.80 per cent, Scarborough Investments Direct has 2.76 per cent and Stroud & Swindon has 2.76 per cent.
Aldermore is appearing well in the cash ISA charts on its 30-day notice cash ISA at 2.65 per cent.
This is matched by Standard Life Bank, and beaten by Newcastle's 3.00 per cent Reward Saver, with a one per cent bonus, and Manchester's Premier ISA at 3.26 per cent.
Behind the name
Aldermore was born in May 2009 from the merger of Ruffler Bank and Base Commercial Mortgages, and is owned by a private equity firm AnaCap.
AnaCap is the first private equity firm to be provided with FSA clearance to be a bank and its operations are focused on lending to small businesses.
With trust so low in the financial industry, it seems a strange time to launch a new bank.
During the crisis, the new names that previously hit the market with high rates suffered and crashed.
In the ensuing mess, savers turned to old tried and tested building societies and NS&I.
Simon Healy, head of savings at Aldermore, explains the firm is trying to use its lack of history as a benefit.
"There are no historic legacy issues. We place a different offer into the market. We talked to customers and they are looking for a bank to do something different."
Rachel Thrussell, head of savings at Moneyfacts.co.uk, explains many of the team behind Aldermore have worked in the Icelandic banks and are keen to repeat how those banks hit the savings market - but without the drama afterwards.
Is the money safe?
Aldermore is British-based and so is registered with the Financial Services Compensation Scheme (FSCS), which covers up to £50,000 of savings per institution and £100,000 for joint accounts.
Aldermore's business model is quite close to that of a building society.
It is pledging not to borrow funds from the wholesale markets for its lending to small businesses - but only raise funds from savers.
Mr Healy adds Aldermore is one of the most well-capitalised banks in the UK.
Will the good rates last?
A new savings provider landing on the market is rare - and the best way to make a splash is to offer high rates.
But will these rates last? It is one of the oldest saving tricks in the book for a provide to reel in customers with high interest rates that drop away.
It is the consumer's job to make sure they stay on top of their savings accounts to get the best rates, rather than staying with a high rate that disappears after a year.
Aldermore is stating its first range of accounts will not offer bonuses, so the rates will hold for the life of the account.
But it is uncertain if the splash will continue.
Mr Healy adds: "The aim of Aldermore is to provide consistently competitive savings."
The primary focus, however, is on the fixed-rate bonds.
"We are not aiming to always be the market leader, but always up there with the top rates."
Ms Thrussell explains it is impossible to know if Aldermore will continue as it starts.
"ING said the same and there long-term plan was to sustain high rates - but it was not so."
No bonus
Aldermore's range of savings accounts do not offer bonuses.
The move from offering bonus rates was deliberate, Mr Healy explains.
"Before launching we spoke with a range of target customers," he says.
The response from the research was savers wanted simple and clear accounts and Aldermore was trying to "make the service as easy and simple as possible".
"A guaranteed rate tends to attract customers over 50 looking to have income from their savings."
Ms Thrussell says: "Bonuses are getting bigger because the big banks can't afford decent rates without bonuses.
"The smaller banks can outsource process and have lower overheads.
"It is up to customers, if they are happier to save with a big name, but not have the higher rates."
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