Watchdog tells nine of the largest banks, including Barclays, HSBC and Nationwide, to give depositors better rates on instant access accounts or face crackdown
Watchdog tells nine of the largest banks, including Barclays, HSBC and Nationwide, to give depositors better rates on instant access accounts or face crackdown
- Banks instructed by the Financial Conduct Authority (FCA) to pay better savings rates
- Only 28 percent of the Bank of England’s key interest rate hikes were passed on
The City watchdog has vowed to “take action” against banks that fail to pass rate hikes on to savers, adding further pressure to the industry.
Nine of Britain’s largest banks and building associations – including Barclays, HSBC and Nationwide – have been urged by the Financial Conduct Authority (FCA) to pay better savings rates on their instant access accounts.
Research by the regulator found that between January last year and May last year, on average only 28 percent of the Bank of England’s base rate hikes were passed on by lenders.
The FCA said banks with the lowest rates have until the end of this month (August) to justify how their savings products comply with a new consumer tax that mandates “fair results” that took effect Monday.
“If they can’t, the FCA will take action,” it added.
The new rules overseen by the UK’s Financial Conduct Authority aim to prevent rip-offs and unexpected charges
The measures are part of the FCA’s 14-point plan designed to hold lenders accountable.
Banks are under increasing pressure from Chancellor Jeremy Hunt to pass on the benefits of higher interest rates to depositors or to clarify where the best offers can be found.
To keep the sky-high inflation under control, interest rates rose from 0.1 percent in December 2021 to five percent last month (July 2023).
The Bank of England is expected to mark its 14th successive rate hike on Thursday.
Then the interest rate, which is at five percent, could rise by 0.25 or 0.5 percent.
But while lenders have increased what they charge borrowers, there has been little increase in what is paid out to depositors.
It comes after NatWest made huge gains on Friday by increasing interest payments on its loans.
The FCA’s plan also includes reviewing the rate at which deposit rates offered by banks change after each Bank of England decision and publishing an analysis of rates on easily accessible accounts every six months.
Sheldon Mills, executive director of consumer and competition at the FCA, said: “We want a competitive cash savings market that offers savers better deals, where interest rates are revised quickly after base rate changes and companies encourage savers to switch to accounts with a higher payout percentage. prices.
“We welcome the progress made so far, but we need to move faster. We will use consumer duty to ensure that this is the case – with companies having to prove to us that they are providing fair value to their customers.”