Banks are being pressed by a powerful committee of MPs to step up “measly” easy access savings rates.
The Treasury Committee has written to the bosses of major banks to ask if they believe all their savings rates provide “fair value” to customers and whether customer inertia is being exploited.
A new consumer duty is coming into force from the end of July, forcing financial firms to put consumers at the heart of what they do.
Harriett Baldwin, chair of the Treasury Committee, said: “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. The time for action is now.”
The high street banks are squeezing higher profits from their loyal savings customers— Dame Angela Eagle
Treasury Committee member Dame Andrea Leadsom said: “While banks play a vital role in our society, stimulating economic growth and supporting thriving businesses, it’s quite clear they have failed to pass on the rise in interest rates to savers.”
Dame Angela Eagle, another member of the committee, said: “In the middle of a cost-of-living crisis, the high street banks are squeezing higher profits from their loyal savings customers.”
The committee has written to the bosses of Lloyds Banking Group, NatWest, HSBC UK and Barlcays.
The Bank of England base rate is sitting at 5%, following 13 hikes in a row.
According to financial information website Moneyfactscompare.co.uk, the average easy access savings rate on the market is at 2.43%. The average easy access Isa rate on offer is 2.55%.
Savers looking for a one-year fixed-rate account can get 4.82% typically.
Many banks have been hiking their savings rates in recent weeks, although some mortgage rates are sitting at a significantly higher level than some rates being offered on savings.
The average two-year homeowner mortgage rate on the market is 6.42% and the average five-year fixed-rate mortgage is 5.97%.
The Treasury Committee has also written separately to the Financial Conduct Authority (FCA), asking if banks have changed their savings rates as a result of the regulator challenging them.
The FCA will oversee the new consumer duty when it comes into force.
