Renault Group launches new bank in the UK
French carmaker Renault has launched a new bank in the UK – RCI Bank – promising market-beating savings rates.
The bank has launched with the Freedom Savings Account, an easy access product paying interest of 1.5%, with no penalties, fees or notice periods as well as unlimited payments and withdrawals.
A quick glance at Moneywise.co.uk/compare indicates that only Buckinghamshire Building Society has an easy access savings account without any area restrictions or conditions paying more (at 2%). However, this has a maximum investment of £400,000 and cannot be operated online or by phone.
RCI Bank is the only bank in the UK owned by a car company. However, RCI Bank is not covered by the Financial Services Compensation Scheme but offers deposit protection via the French guarantee scheme, FGDR. This provides protection for €100,000 worth of savers' money, which is around £73,500 - well below the £85,000 per person covered by the UK scheme.
Is it a real alternative?
Louis Renault built his first 12 cars in France in 1898, and his company grew to the extent that it launched its own bank in 1974 to help customers finance the purchase of Renault vehicles.
Today, RCI Banque Group is still privately owned by Renault and operates in 37 countries across every continent, lending over £8.5 billion a year. In the UK, RCI Banque has been powering the car finance operation with Renault, Nissan, Darcia and Infiniti.
In a statement, RCI Bank said: "[We are] offering a real alternative for UK savers; offering transparency, simple accounts, great service and a promise that we know exactly where our money is."
The Freedom Savings Account has a starting balance of £100 and a maximum of £1 million and RCI says it has "no gimmicks or small print". The bank is expected to launch a suite of additional products later in the year.
Steve Gowler, chief executive of RCI Bank, said: "We're really excited about entering into the UK savings market, and importantly entering the market with an innovative and competitive product. Saving money should not be difficult, which is why we have developed our simple Freedom Savings Account with a rate of 1.50%.
"We believe we have a product that people will love. Over the next 12 months we plan to follow this up with further product launches.
"We also have the added benefit of being part of a global group, working for Renault and Nissan brands, and we are committed to using our strength to deliver the very best savings accounts and security for our customers in the UK."
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.