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Treasury Committee publishes savings rates responses from banks and building societies

8 June 2023

The Treasury Committee today publishes responses on easy access savings rates from Nationwide, Santander, TSB and Virgin Money.

Last month, the cross-party Committee of MPs widened its campaign for banks to increase the savings rates offered to loyal customers, questioning why easy access savings rates are much lower than the current Bank of England base rate.

The MPs asked how the banks and building societies determine the level of interest rate increases to pass on to savers, and whether they inform their loyal customers that higher alternatives may be available.

Collectively, these banks and building societies, defined as ‘scale challengers’, account for a quarter of all personal current accounts, according to the Financial Conduct Authority (FCA).

The responses can be read in full here.

Around 60 per cent of household deposits are held in instant access accounts, according to the Bank of England’s Monetary Policy Committee, who last month reported the pass-through of interest rate rises to savers has been “unusually weak”.

When the Committee began its inquiry into retail banks in February, the big four banks offered between 0.5 and 0.65 per cent for easy access savings accounts. Today, the big four offer rates between 0.7 and 1.35 per cent. The Bank of England interest rate is currently 4.5 per cent.

Chair comment

Commenting on the correspondence, Harriett Baldwin MP, Chair of the Treasury Committee, said:

“With the Bank of England confirming the pass through of base rate increases to easy access savings accounts has been unusually weak, it’s clearer than ever that the nation’s biggest banks need to up their game and encourage saving. While other products are available to those who shop around, the measly easy access rates on offer lead us to conclude that loyal customers are being squeezed to bolster bank profit margins.

“We remain concerned that the loyalty penalty is especially prominent for elderly and vulnerable customers who may still rely on high street bank branches.”

Jenny Ross, Editor of Which? Money, said:

"Our research has shown that high street banks have been short changing savers by paying unjustifiably low rates for years - and MPs are right to hold them to account for this.

"The introduction of the FCA's Consumer Duty must mean tough action against firms who continue to offer such meagre rates.

"In the meantime, the advice from Which? is simple: if you’re not happy with the interest you’re earning from your bank, now’s the time to switch."

The Committee has been questioning retail banks on their easy access savings rates. Earlier this year, the Committee questioned the chief executives of Barclays UK, HSBC UK, Lloyds Banking Group and NatWest Group. Correspondence following the evidence session can be read in full here.

Last month, the Financial Conduct Authority (FCA) revealed to the Committee that the harm to loyal customers earning low savings rates was likely to have increased as interest rates have risen.

Further Information

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