M&S Money has launched an Advantage Cash ISA paying 3 per cent, and which allows transfers in from other ISAs.

It can be opened with a minimum deposit of £100 lump sum followed by minimum monthly deposits of £25.

The 3% rate is variable, but there is no short-term bonus so the return won’t plummet after a few months and savers will be informed by post if the rate changes.

Fleur Carruthers, savings and investments manager at M&S Money said: “We hope that keeping Advantage Cash ISA simple will reassure customers that their tax-free money is in safe hands.

“We have handled thousands of ISA transfers from other providers in recent years, so customers can be confident that transferring their other ISAs to us will be simple and straightforward.”

An unlimited amount of withdrawals and top-ups are allowed, but once a saver reaches their annual deposit limit, withdrawals cannot be re-invested in an ISA.

Another new ISA coming onto the market is Lloyds TSB’s Junior Cash ISA which will be available from 13 February.

It will be offered at a tax free flat rate of 3 per cent AER, compared with the average rate currently available with Junior ISAs of 2.63 per cent.

Greg Coughlan, head of savings for Lloyds TSB, said: “The Junior ISA allows parents to set aside money throughout their child’s life in a tax efficient way, building that all important nest egg which could either help fund their university education or help them take that first step on the property ladder.”

“We are delighted to be the first of the major high street banks to announce such an account for customers.”

The Junior ISA locks away savings until the child turns 18 and will then mature into an Adult Cash ISA.

There is growing speculation that National Australia Bank (NAB) may sell Yorkshire Bank and Clydesdale Bank after the Australian parent company announced a strategic review of the two banks’ operations.

The Australian economy is performing well and NAB reported strong profits for the final quarter of 2011 but with the UK economy at a virtual standstill the performance of the Clydesdale and Yorkshire banks has suffered.

NAB says the review is aimed at repositioning the banks to improve returns but analysts believe that this could signal that they could be offloaded, allowing NAB to focus on expansion in Asia.

In a statement accompanying NAB’s quarterly results, the group’s chief executive Cameron Clyne highlighted the eurozone crisis and the UK government’s austerity measure as factors which would extend the UK’s subdued growth.

“UK GDP declined by 0.2% in the December quarter. These difficult conditions have adversely affected the performance of UK Banking,” he said.

“Given our view that recovery is now a longer term prospect, NAB has commenced a strategic review, and will work with UK management to appropriately reposition its business mix and structure for the changed economic environment and improve returns,” he continued.

David Thorburn, chief executive of Clydesdale Bank, said “We will continue to support our branch network and invest in developing online and telephone banking services for both retail and business customers.

“We will also remain committed to providing support for savers and mortgage customers across the UK.”

There is speculation that NAB’s UK banking division may become a takeover target for NBNK, a newly formed UK bank run by former Northern Rock chief executive Gary Hoffman.

Meanwhile Lloyd’s Banking Group has announced the closure of three offices, with the loss of around 1,000 jobs, as part of its strategic review.

Fred Goodwin, the former chief executive of the Royal Bank of Scotland (RBS), has been stripped of his knighthood for his role in the bank’s collapse during the 2008 credit crunch.

The Queen formally approved the annulment of the honour yesterday, after it was decided Mr Goodwin’s award brought the honours system into disrepute.

The decision is unprecedented as honours have formerly only been withdrawn from people convicted of a crime.

Mr Goodwin was knighted in 2004 for services to banking but his actions during the banking crisis are believed to have contributed to the collapse of RBS.

The bank received £45bn of rescue-funding and is now more than 80% owned by the Government.

The Financial Services Authority and Treasury Select Committee believe the banks’ failure was a key factor in financial crisis and the subsequent recession in the UK.

Mr Goodwin oversaw the takeover of Dutch bank ABN Amro in a £49bn deal which took place at the onset of the credit crunch, exposing RBS’s weak balance sheet and precipitating its collapse.

When Mr Goodwin left the bank in November 2008 his £703,000-a-year pension deal, which included a £2.7m lump sum, led to public outrage.

In the event of a future banking crisis, Britain’s finance ministry will be able to take charge after new law reforming the regulation of the country’s financial system takes effect next year.

The legislation will disband the Financial Services Authority from 2013 and give the central bank the power to supervise banks and insurers.

In a speech following the publication of the draft law, Chancellor of the Exchequer George Osborne said: “When taxpayers’ money is at risk in a crisis this legislation gives the Chancellor (of the Exchequer) the power to direct the Bank of England to act.”

Speaking to the BBC after the Royal Bank of Scotland’s chief executive announced his decision to forgo his bonus this year, the government has said that it will not block bonuses to the bank’s other executives.

RBS chief executive Stephen Hester was awarded £963,000 in shares but following pressure from public opinion and MPs he decided to follow the example of Lloyds Banking Group’s chief executive and waive his award.

Lloyds chief António Horta-Osório gave up a bonus which could have been worth £2.4m.

“We are not going to micro-manage bonuses,” a Downing Street spokeswoman said.

Bankers’ bonuses have been coming under increasing scrutiny since the 2007 banking crisis and with most banks expected to record a drop in revenues this year, the bonuses have been perceived as a reward for failure.

Banks’ investment banking operations suffered poor trading last year and multi- billion pound payouts for mis-sold payment protection insurance (PPI) have resulted in lower income which will reduce underlying profits.

Although Downing Street now plans to leave the question of bonuses to RBS’s management, Labour says it will continue to closely monitor the bonuses awarded to senior staff at RBS which is 66 per cent owned by the government.

At a European Parliament hearing in Brussels today, the European Union said it may impose tighter regulations on banks’ bonus payments to staff if they go against “all reason, common sense and morality.”

Michel Barnier, the European Union’s financial-services commissioner, may tighten up laws which govern banks across the EU if excessive bonuses continue to be paid.

One idea under consideration if for the role a bank’s shareholders play in setting pay awards to be strengthened.

Mr Barnier said the European Commission, the executive body of the European Union, will be “extremely vigilant” in monitoring bonuses paid by banks in 2012.

National Savings & Investment is cutting the interest rate on its Direct Saver account from 1.75% to 1.5% with effect from today, because the account is too popular.

Government-backed NS&I has already substantially exceeded its target to raise £2bn from savers in the 2011/12 financial year and now needs to slow the rate of deposits into its accounts in order to protect competition in the market place.

The Building Societies Association (BSA) has welcomed the interest rate cut.

It has previously warned that NS&I has had an unfair advantage over building societies since the onset of the banking crisis in 2007.

Since then, NS&I has attracted more than 10% of new savings, with customers seeing it as a safe place to keep their cash.

Adrian Coles of the BSA said: “It [NS&I] has unique advantages because it can offer a 100% state-backed guarantee and building societies have been losing funds to NS&I.”

NS&I has already raised £4.8bn during 2011/12 and hopes the lower interest rate will help to cut this back to £4.5bn by the end of the financial year.

Jane Platt, the chief executive of NS&I, said “Since November we have seen an increase in customer deposits.

“This has been driven by a relatively small number of savers depositing large amounts of money, particularly into our Direct Saver account.

“We have also seen a decrease in the number of customers withdrawing their money from products across our range.”

The changes to the Direct Saver account will affect just under 20,000 customers.

Earlier this month NS&I experienced problems with its website, with customers having to phone the organisation’s call centre to carry out transactions.

The agency quickly resolved the technical issue which caused the site to fail completely to load on customers’ computers.

Consumer group Which? is calling for unfair overdraft charges to be stopped after finding that charges are too complicated and impossible to compare.

Which? asked a number of volunteers to calculate how much an unauthorised overdraft would cost at RBS-NatWest, HSBC/First Direct, Lloyds, Barclays, Halifax, Nationwide and Santander.

The volunteers, who included a maths PHD student, were only able to calculate seven out of 48 charges correctly.

The study found that there is a wide discrepancy between the overdraft charges levied by different banks.

First Direct and HSBC charged the highest unauthorised overdraft fee – at £150 a month, while Barclays would charge just £66.

However all of the charges were so complex that it would be impossible for most people to work out the best deal.

Which? also criticised banks for charging high daily fees which can equate to an APR of over 2,000 per cent.

The consumer group is calling on the Government to give the new financial regulator, the Financial Conduct Authority (FCA), sufficient power to stop banks levying excessive and complex fees.

The FCA, which will take on responsibility for enforcement and conduct from the Financial Services Authority, is expected to have the power to oversee the design of financial products.

Peter Vicary-Smith, Which? chief executive, said: “The regulator must be a strong, open and proactive watchdog that stands up to the banks, not a lapdog”.

In related news, Virgin seems to have backtracked on its plan to charge for all its current accounts.

The move would have meant customers currently using free-if-in-credit accounts having to start paying around £60 a year in fees.

The plan was revealed by Virgin Money’s chief executive Jayne-Anne Gadhia in an interview with the Daily Mail, but Sir Richard Branson, chairman of the Virgin Group, has now commented that it would be “very unwise” to stop offering free current accounts.

By 2015 bank customers will use digital banking more than they use branches according to ‘The New Digital Tipping Point’ report from PricewaterhouseCoopers.

The survey, of 3000 people in nine countries, suggests that customers are willing to pay up to £10 a month for online banking if they receive convenience and added-value services.

These could be services such as financial management tools, transaction notifications through Twitter, Facebook and other social networks, and loyalty cards.

Two thirds of UK respondents to the survey said they would pay around £4 a month for a loyalty card which would allow them to collect points that they could convert into cash.

The survey suggests that banks are lagging behind industries such as retail and travel in using technological developments to improve their services.

It also suggests that in the UK, the “optimal” price for digital banking would be £4.20.

At this price there would be widespread take-up of the service among customers.

In a statement, Stephen Whitehouse, a partner at PwC, said: “Banks are clearly missing a trick if they don’t start to invest in their digital offerings and only see digital as a way to reduce costs.

“The majority of banks still only provide basic mobile and Internet banking services.”

In related news, UK banks were told by the Chancellor of the Exchequer today that they should reduce pay in order to fund regulatory reforms.

Reforms to protect against banks’ financial failure have been proposed by the Independent Commission on Banking and are expected cost UK banks up to £10 billion.

Speaking to MPs on the Treasury Select Committee prior to the annual bank bonus round Mr Osborne said that banks should not absorb these costs by increasing the cost of lending but should reduce their remuneration, including bonuses.

The Post Office has strengthened its range of savings products with a reward saver account offering 3 per cent interest and a notice period of only 30 days.

If savers make a withdrawal without giving 30 days notice, they will lose 30 days interest on the amount withdrawn.

The interest rate includes a 1.25% bonus for the first year.

Like all Post Office products the account is covered by a ‘savings promise’, which means that any Bank of England base rate changes until January 2013, will be mirrored by the interest on the account.

Customers can access the reward saver account at Post Office branches, by phone or by post.

Post Office Director of Savings and Investments, Richard Norman, said: “The new issue of the Post Office Reward Saver account further demonstrates our dedication to branch savers.

“The best buy rate will help more people make their money work harder for them.”

The account reflects an increasingly competitive savings market.

The latest survey by Moneysupermarket.com suggests that average savings rates for easy access accounts have increased by 0.23 per cent to 2.97 per cent in the last year.

The figures are based on the average interest rate paid by the top five easy access accounts.

ISA rates have also increased, with the average rates paid by a one year fixed rate ISA now 3.17 per cent compared with 2.99 per cent in 2011.

Bonds have followed a similar trend with the average top five rates for one year and two year fixed rate bonds based on £10,000 increasing by 0.46 per cent.

Meanwhile, mortgage and loan rates have fallen over the past year.

Kevin Mountford, head of banking at Moneysupermarket.com , said: “Savers have suffered from a low base rate environment for almost three years so it’s encouraging to see banks and building societies increasing competition to attract savers, offering attractive headline rates compared with a year ago.”

Credit unions which have previously had to restrict their services to a common group of members, such as residents of certain geographical area, will be able to expand under new legislation.

While they were only allowed to offer services to individuals, changes to the Credit Unions Act means that they are now allowed to provide services to businesses and community organisations.

They can also pay interest on deposits, instead of a dividend, which will make it much easier for consumers to compare their savings products with other providers’ products.

The changes will allow Credit Unions to expand and compete with high street banks and other savings providers, increasing competition on the high street.

The 450 credit unions in Britain are owned and controlled by their members and are run by volunteers.

They have no shareholders and any profits are used to develop the credit union and provide a return to savers.

This model means that they are well-placed to provide fair and affordable financial services with the advantage that money invested remains within the local economy.

Credit Unions are covered up to £85,000 by the Financial Services Compensation Scheme.

Mark Lyonette, chief executive of the Association of British Credit Unions (Abcul), said: ‘These changes are a major breakthrough in the delivery of credit union services to communities around Britain.

“The new rules mean credit unions can now compete more effectively with banks and other lenders to provide fair and affordable financial services.”

There are 40,258 credit unions in 79 countries worldwide.

Together, they offer affordable financial services to 118 million members.

The latest Credit Union to open its doors in the UK is the First Choice Credit Union which opens on 13 January at the Ribble Valley Citizens Advice Bureau in Clitheroe, Lancashire.

Virgin Money, the new owner of Northern Rock, is to begin charging all new customers for current accounts, even if the account remains in credit.

Virgin Money’s chief executive Jayne-Anne Gadhia “Most people know there is no such thing as free banking.

“Banks have to cover the cost of free current accounts with hidden charges such as overdraft fees.”

Her comment echoes the views of Andrew Bailey, Director of Banking at the Financial Services Authority, who said last month that free-if-in-credit current accounts led to higher charges being levied on other products.

Virgin Money will charge new customers around £5 per month for a current account, amounting to £60 per year and there is concern that other banks could follow suit.

Around 80 per cent of the 50 million current accounts in the UK are free-if-in-credit accounts and Virgin Money’s move has been criticised by consumer groups for putting further pressure on already stretched household incomes.

To soften the blow, Virgin Money will offer discounts on services such as health clubs to fee-paying current account customers.

Virgin Money has also strengthened its savings range with an instant access account and Isa offering 2.85% interest.

The bank says the new Virgin Easy Saver and Virgin Easy Access Cash Isa are simple, fair and transparent.

The 2.85% interest rate is not reliant on bonuses, so returns will not plummet after 12 months as they do with many savings products and both accounts allow customers to make as many withdrawals as they wish without incurring a penalty.

The Isa allows transfers in of cash Isa savings held at other providers.

Both the Easy Saver and the Easy Access Cash Isa are available in Northern Rock branches, online, by post and over the telephone.