Banks pocket cheap money

Tim Bennett rounds up this week’s personal finance news, including why the banks' Funding for Lending Scheme isn't working, and where savers can find a 5% interest rate.

Are our banks playing fair on the Funding for Lending scheme? It's not looking good so far, says Rachel Rickard Straus on Thisismoney.co.uk. According to the latest data, net lending by banks and building societies has fallen by £1.5bn in the six months since the scheme launched, despite borrowing via the scheme (which gives banks access to cheap funds) coming in at £13.8bn.

One of the worst culprits, Santander, has cut lending by £6.3bn despite drawing down £1bn. Given savers are being hammered with lower interest rates on their deposits, you have to wonder where all this new money is going. The answer appears to be into bolstering banks' balance sheets and keeping salary and bonus cheques flowing.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.