Richard Lloyd, Which? executive director, said:
“The exact impact this credit rating downgrade will have on consumers is uncertain but there are steps people can take to protect their money. People should spread their money across different banks and make sure their cash is in an account covered by the UK compensation scheme, which guarantees savings up to £85,000 per person, per financial institution.
“But the Government should move now to ensure this protection is offered at a brand level rather than by banking institution. With the many bank merges and takeovers of recent years it is unrealistic to expect consumers always to be aware of who owns their bank and whether their money is fully protected.
“This announcement will also lead to speculation that it will cause a further rise in mortgage rates. For too long banks have taken advantage of the lack of competition on the high-street to increase the interest rates charged on mortgages, loans and overdrafts, with over 1 million consumers seeing their yearly mortgage payments increase by over £300 million with the Standard Variable Rate rises earlier this year. This is why we cautiously welcomed the Chancellor’s recent “funding for lending” scheme. But we want to see strong safeguards in place to ensure that banks pass on this cheap credit to consumers.”