The time for feeble excuses is over, MPs warned banks yesterday in their latest attack on abysmal savings rates.
Earlier this month, the Treasury Committee asked the chief executives of the UK’s largest banks whether all their savings products offer customers ‘real value’.
Responding to the banks’ responses, committee chair Harriett Baldwin MP said: ‘If the big banks continue to pay low savings rates on their instant accounts, they need to make sure their customers know that better rates are available.
“As the government, the regulator and the governor of the Bank of England agree with the committee that action is needed, the time for lame excuses is over.
“This is a subject of great interest to our committee and one that we will continue to monitor closely, especially when the banks report their half-year results in the coming weeks.”
Lowest rates: when the UK’s big four banks were asked how they would convince the government that they offer value for money, they replied with lame excuses
And yet, when the big four UK banks were asked how they would convince the government that they offer value for money, they responded with jargon-laden excuses and bragged about how they ’empower’ customers with good communication.
At the beginning of this month, the committee asked the four banks: How could you convince us that all your savings interest offers your customers ‘real value’ and that customer inertia is not being abused?
In written responses, Barclays referred to a “continuum of needs” and “fairer pricing principles”, while NatWest showed a “renewed strategy for personalization and lifetime value”.
HSBC promised to “put up posters in all branches inviting customers to talk about their savings needs,” let alone close 114 branches by 2023 – a point conveniently omitted.
And Lloyds vowed to ‘continuously improve travel beyond 2023’. Unsurprisingly, all banks emphasized how good they were at communicating with customers. All denied taking advantage of customer inertia to pay low fares and get easy money.
There was a lot of talk about fixed rate accounts, which required customers to lock up their money, but savings accounts that were easily accessible were forgotten.
While their apologies were corny, the underlying message is clear: Stop using their regular instant access accounts if you want a decent return on your money.
It is a message consistently delivered by Money Mail. These banks regularly appear in our ‘Dump Now’ box of accounts that we advise you to delete immediately. High Street banks blatantly continue to pay about a quarter of the interest on their easily accessible accounts that you can earn elsewhere.
They provide easy access to savings rates from 0.9 to 1.75 percent. The base interest rate of the Bank of England is 5 percent.
The five largest banks – including Santander – posted combined profits of more than £5bn in the first quarter of this year, according to research by Atom Bank, with most of the profits coming from driving up mortgage rates at the expense of savers . They will probably have earned even more in the next three months.
The Bank of England has been raising interest rates rapidly since December 2021, from 0.1 percent to 5 percent today.
At best, banks passed on just 1.74 percentage points of the 4.9-point rise in base rates – less than half. At worst, they handed over just 0.89 points – less than a fifth.
In the wider UK market, average easy access rates pay 2.61 percent, according to rate monitors Moneyfacts, while the top accounts pay 4 percent or more.
Three of the major banks have passed on a modest sliver to their depositors in recent weeks.
Whether this is because the Bank of England’s key interest rate rose to 5 percent on June 22, or because of pressure from the Treasury Committee, is unclear.
Barclays increased its rate on its Everyday Saver. However, it still pays a paltry 1.51 per cent on balances up to £10,000 and just 1 per cent on higher balances.
Last week, NatWest raised the rate on its Flexible Saver to pay 1.41 per cent on balances up to £25,000.
HSBC raised the interest rate on its Flexible Saver to 1.75 percent at the end of last month.
Lloyds has not announced any new rates for its Easy Saver since the base rate hike in June. It still pays 0.9 per cent on balances up to £25,000.
The Financial Conduct Authority, the banking regulator, told banks last week they need to move faster to pass on interest rate hikes and ensure customers benefit from better-value savings accounts.
There is no doubt that the banks offer some good accounts to their current account holders.
For example, if you are a Barclays customer and have joined the Blue Rewards program (provided you bank online and deposit a minimum of £800 into your current account each month), you can open a Rainy Day Saver and earn monthly cash rewards .
That makes an extremely competitive 5.12 per cent, but only on the first £5,000 in the account. You get 1 percent on everything above that.
NatWest has its Digital Regular Saver at a higher 6.17 per cent, but again the high rate is capped at the first £5,000 in savings.
You can save between €1 and €150 per month. But you only earn 1.41 per cent on all savings above £5,000.
HSBC pays 4 percent to current account customers who open the Online Bonus Saver – but only in months when you don’t withdraw. In the ones you do, you earn 1.75 percent.
Lloyds and Halifax offer Club Lloyds Advantage Saver at 3.2 percent and Halifax Reward Bonus Saver at 3.4 percent. But you only earn this if you do less than three shots.
If you earn more, you will earn 0.8 percent and 0.85 percent respectively for the rest of the year.
But you will be moved from the account to the standard easy-access accounts after one year.
They pay low rates of 0.9 percent and 0.95 percent respectively. It is up to savers to move the money.
sy.morris@dailymail.co.uk
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