UK banks asked by lawmakers if they’re ‘exploiting’ savers with low rates
2023.07.03 06:17
© Reuters. FILE PHOTO: Pound Sterling notes and change are seen inside a cash resgister in a coffee shop in Manchester, Britain, Septem,ber 21, 2018. REUTERS/Phil Noble/File Photo
By Iain Withers
LONDON (Reuters) -British banks faced fresh criticism on Monday 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 (LON:), HSBC, Lloyds (LON:) 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 in a statement. “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, despite the benchmark rate ratcheting up to 5% – the highest since 2008.
The Treasury committee had on June 8 criticised easy-access savings rates of between 0.7% and 1.35% at a time when the central bank had raised the base rate to 4.5%.
Finance minister 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.
The four banks did not immediately respond to Reuters requests for comment.
Top executives from the banks were grilled by the Treasury committee on savings rates during a session in February.
The banks have previously argued they are increasing savings rates, particularly for fixed-term savings products, and were offering a variety of support to customers struggling in the cost of living crisis.
The Treasury committee said it had also written to regulator the Financial Conduct Authority 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 regulator was not immediately available for comment.
