Increase savings rates, MPs tell big banks

MPs call on major banks to increase paltry savings rates and offer customers ‘real value’ as they accuse them of ‘blatant profit’

  • The Treasury Committee has contacted CEOs of the UK’s largest banks
  • It was asked if customers’ inertia was being exploited when it comes to saving
  • The FCA introduces the need for companies to provide ‘real value’ to their customers

MPs today stepped up the campaign for banks to raise the interest rates banks pay on customer savings.

The cross-party Treasury Committee of MPs has contacted the chief executives of the UK’s largest banks to ask whether they believe all their savings offer ‘fair value’ and whether customer inertia is being exploited .

At the end of this month, the Financial Conduct Authority will introduce the consumer duty, a requirement for companies to always act in good faith and offer a fair price to their customers.

Fair price? Some major banks continue to pay 1% or less into standard easy access accounts

The MPs asked the top executives whether they are sure that their current savings products are in line with the consumer obligation.

They also asked whether the new rules will change their interactions with customers and what steps they will take to notify their customers of available higher rates.

Despite a new era of higher interest rates, which has seen the Bank of England’s base rate rise from 0.1 per cent to 5 per cent in 18 months, some of the bigger banks continue to offer savings accounts paying 1 per cent or more. fewer.

For example, Santander’s Everyday Saver pays 0.85 percent, Halifax pays 0.95 percent on credits up to £10,000, and Barclays pays 1 percent on its Everyday Saver.

Savers will hope that the added pressure of a rising base rate may prompt some of the biggest banks to raise interest rates on savings.

The average low-threshold savings interest across the entire market now pays 2.43 percent, according to Moneyfacts. The best easily accessible deal currently pays 4.25 percent.

Separately, the committee also wrote a letter to the FCA asking whether banks have changed their savings rates as a result of the regulator’s challenge and how fair value to customers will be assessed.

The regulator has also asked what enforcement measures can be taken if companies fail to comply with consumer obligations, and how it will assess whether banks are making sufficient efforts to encourage savers to switch to higher rates.

Harriett Baldwin, Member of Parliament and Chairman of the Treasury Committee, said: ‘With interest rates rising and our constituents feeling pressured by rising prices, it is only right that the UK’s biggest banks raise their pitifully easy savings rates. It is now time for action.

‘Especially the largest high street banks play an important role in stimulating savings.

‘At the moment they are failing in that social duty. We hope to get answers to these important questions in due course.’

On the rise: Average savings rates have risen across the market recently, with smaller challenger banks and mortgage banks leading the way

On the rise: Average savings rates have risen across the market recently, with smaller challenger banks and mortgage banks leading the way

Dame Angela Eagle MP, member of the Treasury Committee, condemned what she described as ‘blatant profiteering’ by the banks in the midst of a cost-of-living crisis.

She added: “It is clear to me that this behavior is miles away from the incoming requirement for companies to treat their customers fairly and with respect.

‘When the committee started its investigation into retail banks in February, the four major banks offered easy savings rates between 0.5 and 0.65 percent.

“Today, the big four offer rates between 0.9 and 1.75 percent. The Bank of England interest rate is currently 5 percent.’