Several major UK high street banks are coming under fire for failing to pass on growing interest rates to their savers amid allegations of profiteering.
According to a report by the i newspaper earlier this year, the UK’s seven biggest banks earned additional profits of £4.8bn in 2022 thanks to interest rate hikes by the Bank of England, which are designed to reduce inflation.
HSBC, NatWest, Lloyds and Barclays have all been summoned by the UK’s Financial Conduct Authority (FCA) to a meeting on Thursday to discuss how they can better serve their savings account customers.
The FCA’s Consumer Duty regulation will come into force at the end of this month, forcing firms to ensure they deliver good outcomes for their retail customers and act in their best interests at all times.
A source at the Treasury told the i newspaper that a “savings charter”, which would outline specific standards banks must meet for savers, could be in the works.
Earlier this week, MPs on the Commons Treasury Committee raised concerns about high street banks profiteering and failing in their “social duty” to encourage consumers to save.
The Committee sent letters to Barclays, Lloyds, HSBC, NatWest and the FCA highlighting the specific requirements of the Consumer Duty and asking how banks plan to meet those requirements. “The MPs ask if banks are confident their current savings products are in line with the consumer duty, how the new rules will change their interactions with customers, and what steps they’re taking to notify their customers of higher rates available,” said the Committee in a statement. “Separately, the Committee today also writes to the FCA, asking if banks have changed their savings rates as a result of the regulator challenging them, how ‘fair value’ for customers will be assessed, and what enforcement action can be taken if firms do not comply with the consumer duty. The regulator is also asked how it will judge whether banks are making enough effort to encourage savers to switch to higher rates.”
The Bank of England has set the base interest rate at 5% and is expected to raise it up to four more times this year. Despite this, the largest high street banks are currently only offering rates of between 0.9% and 1.75% on instant access savings accounts – but are hiking charges on loans and mortgages due to rising base rates.
Labour MP Angela Eagle, said: “In the middle of a cost of living crisis, the high street banks are squeezing higher profits from their loyal savings customers. 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.”
According to a report by the i newspaper earlier this year, the UK’s seven biggest banks earned additional profits of £4.8bn in 2022 thanks to interest rate hikes by the Bank of England, which are designed to reduce inflation.
HSBC, NatWest, Lloyds and Barclays have all been summoned by the UK’s Financial Conduct Authority (FCA) to a meeting on Thursday to discuss how they can better serve their savings account customers.
The FCA’s Consumer Duty regulation will come into force at the end of this month, forcing firms to ensure they deliver good outcomes for their retail customers and act in their best interests at all times.
A source at the Treasury told the i newspaper that a “savings charter”, which would outline specific standards banks must meet for savers, could also be in the works.
Earlier this week, MPs on the Commons Treasury Committee raised concerns about high street banks profiteering and failing in their “social duty” to encourage consumers to save.
The Committee sent letters to Barclays, Lloyds, HSBC, NatWest and the FCA highlighting the specific requirements of the Consumer Duty and asking how banks plan to meet those requirements.
“The MPs ask if banks are confident their current savings products are in line with the consumer duty, how the new rules will change their interactions with customers, and what steps they’re taking to notify their customers of higher rates available,” said the Committee in a statement. “Separately, the Committee today also writes to the FCA, asking if banks have changed their savings rates as a result of the regulator challenging them, how ‘fair value’ for customers will be assessed, and what enforcement action can be taken if firms do not comply with the consumer duty. The regulator is also asked how it will judge whether banks are making enough effort to encourage savers to switch to higher rates.”
The Bank of England has set the base interest rate at 5% and is expected to raise it up to four more times this year. Despite this, the largest high street banks are currently only offering rates of between 0.9% and 1.75% on instant access savings accounts – but are hiking charges on loans and mortgages.
Labour MP Angela Eagle, said: “In the middle of a cost of living crisis, the high street banks are squeezing higher profits from their loyal savings customers. 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.”
