‘Blatant profiteering’: Bank chiefs hauled in front of FCA to discuss failure to pass on interest rates to savers
Bank chiefs are meeting Financial Conduct Authority (FCA) officials on Thursday to discuss concerns surrounding interest rates for savers lagging behind the cost of mortgages.
Bosses from HSBC, Natwest, Lloyds and Barclays are expected to attend.
According to data from Moneyfactscompare.co.uk, the average easy access savings rate on offer on Thursday is 2.49 per cent.
Average two- and five-year fixed-rate mortgage rates recently broke through the six per cent mark for the first time this year, having previously been above six per cent during the market volatility that followed last autumn’s mini-budget.
The average two-year fixed homeowner mortgage rate is 6.52 per cent and the average five-year fixed mortgage rate is 6.02 per cent, according to Moneyfacts’ figures.
The Bank of England base rate is currently five per cent, having increased 13 times in a row as the Bank tries to subdue stubbornly high inflation.
The Treasury Committee has been pressing banks to address concerns about the savings rates being paid.
Dame Andrea Leadsom, a former Cabinet minister who sits on the committee, recently said: “It’s quite clear they have failed to pass on the rise in interest rates to savers.”
Colleague Dame Angela Eagle said previously: “This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”
Providers have been adjusting some savings rates upwards in recent days – and on Thursday morning there was a flurry of new savings announcements.
Skipton Building Society launched a new bonus saver on Thursday, offering savers a rate of 4.22 per cent in its first year, which then reverts to 3.60 per cent.
HSBC UK announced on Thursday that some savings rate changes will take place from Friday, including new rates of 5.05 per cent on its one-year fixed-rate saver and 5.10 per cent on its two-year fixed-rate saver. This follows some savings rate increases on HSBC accounts unveiled last week.
Yorkshire Building Society launched a new range of fixed-rate Isas on Thursday, including a one-year fixed-rate Isa at 5.10 per cent and a two-year fixed-rate Isa at 5.20 per cent.
Meanwhile Shawbrook launched a new easy access savings account on Thursday, paying a rate of 4.35 per cent.
On Wednesday, Coventry Building Society unveiled a one-year fixed-rate Isa at 5.30 per cent and a two-year fixed-rate Isa at 5.40 per cent.
Nationwide Building Society also announced some new savings deals on Wednesday, including a one-year fixed-rate Isa and one-year fixed-rate bonds paying 5.10 per cent.
From the end of July, a new consumer duty will be introduced by the FCA to force financial firms to put consumers at the heart of what they do.
The new duty sets higher and clearer standards of consumer protection across financial services and requires firms to put their customers’ needs first.
Asked previously whether the banks’ behaviour amounts to profiteering, Prime Minister Rishi Sunak’s official spokesman said: “It’s something the regulator is looking into.”
Government minister Chris Philp said it is “wrong” that some banks “haven’t increased the rates they pay savers commensurately”.
“I think the FCA are quite right to call them in and raise that forcefully,” he told Sky News.
“We do need banks to behave in a way that’s fair, reasonable and is properly competitive as well.”
Press Association – Vicky Shaw