• Wednesday, July 17, 2024

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MPs question banks over poor savings rates

British banks have come under pressure from lawmakers and consumer campaigners for not passing on the extent of higher Bank of England rates to savings customers

HSBC says it has increased its savings rates more than a dozen times since the start of 2022

By: Eastern Eye

BRITISH banks faced fresh criticism on Monday (3) for the savings rates they offer to cash-strapped customers, in the latest intervention by parliament’s influential Treasury Select Committee.

The committee said it had written to the country’s “Big Four” banks – Barclays, HSBC, Lloyds and NatWest – asking if they believed their savings rates provided “fair value” and if customer inertia, or reluctance to change accounts, was being exploited. “With interest rates on the rise and our constituents feeling squeezed by rising prices, it is only right that the UK’s biggest banks step up their measly easy-access savings rates,” Harriett Baldwin, chair of the committee, said. “The time for action is now.”

British banks have come under pressure from lawmakers and consumer campaigners for not passing on the extent of higher Bank of England rates to savings customers.

The Treasury committee had on June 8 criticised easy-access savings rates of between 0.7 per cent and 1.35 per cent at a time when the central bank had raised the base rate to 4.5 per cent. The base rate was raised to five per cent on June 22.

Chancellor Jeremy Hunt also said last week banks were too slow to pass on increases in central bank rates to savers and that the problem needed to be resolved. Baldwin added she believed banks were failing in their “social duty” to encourage customers to save.

HSBC said it had increased its savings rates more than a dozen times since the start of 2022, while Barclays said it regularly reviewed saving product rates.

NatWest declined to comment, while Lloyds did not respond to a request for comment. Top executives from the banks were grilled by the Treasury committee on savings rates during a session in February.

A spokesperson for bank lobby group UK Finance said rates on savings products were determined by a number of factors, including whether someone wanted to have instant access or not. “Savings rates have increased and we always encourage people to shop around for the product and interest rate that is suited to their needs,” the spokesperson added.

The Treasury committee said it had also written to regulator the Financial Conduct Authority (FCA) asking if banks had responded to the pressure applied on them and what enforcement action could be taken under a “consumer duty” coming into force later this month.

The FCA said it would report by the end of the month on how well the cash savings market was supporting savers.

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