National Savings and Investments has been forced to drop the interest rate paid on its Children's Bonus Bond product by a tenth because of subdued gilt rates.
While other products were affected, the executive agency decided not to reduce rates on Children's Bonus Bonds until now because they are traditionally seen as a big seller in the run-up to Christmas.
As gilt yeilds have not recovered since then NS&I feels it can no longer "afford" to pay out at the previous rate of 4.45%, but will continue to pay the previous rate on bonds already held by consumers.
NS&I further adds its changes have been few and far between compared with private sector financial services firms. It quotes Abbey cutting its rates five times in the past 12 months, with NatWest and Alliance & Leicester cutting their rates in the past three months.IFAonline
Avoids paperwork with two-step process
Investment process will use machines
Mark Sterling accused of operating a collective investment scheme without authorisation
'Increasing engagement will only favour those prepared to put in the effort'