FCA Urges Leading UK Banks to Justify Failure to Increase Savings Rates in Line with Interest Rises
Top executives from major UK banks, including HSBC, NatWest, Barclays, and Lloyds, are due to meet with the Financial Conduct Authority (FCA) in response to concerns over the widening gap between savings rates and rising mortgage costs. The meeting follows accusations of “blatant profiteering” by banks, as savings rates continue to fall short of expectations despite the Bank of England’s base interest rate hitting 5%.
Members of the Treasury Committee, led by Dame Andrea Leadsom and Dame Angela Eagle, have expressed frustration at the banks’ failure to increase savings rates in a manner that reflects the 5% base rate. They have written to the banks demanding explanations, arguing that savings rates, such as the average 2.43% for easy-access accounts, are too low when compared to typical mortgage rates of 6.42% for homeowners.
With a new consumer duty coming into effect later this year, which requires banks to prioritise the interests of their customers, the issue of fairness and transparency in financial dealings has come under increased scrutiny. Ministers, including Work and Pensions Secretary Mel Stride, have voiced concerns about the banks’ conduct, urging that they be held accountable for the slow pace of change.
The meeting between the FCA and bank leaders is seen as a crucial moment for both the regulator and the public, as banks face increasing pressure to align their savings offerings with the higher interest rates impacting borrowers.
