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Treasury Committee steps up savings rates campaign with questions to the biggest banks and regulator

3 July 2023

The Treasury Committee today steps up its campaign for banks to increase savings rates as it questions the biggest high street lenders and the regulator.

At the end of July, the Financial Conduct Authority (FCA) will introduce the consumer duty, a requirement for firms to always act in good faith and deliver ‘fair value’ for their customers.

In new correspondence to the chief executives of the UK’s largest banks, the cross-party Committee of MPs asks if the banks believe all their savings rates provide ‘fair value’ to customers and whether customer inertia is being exploited.

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.

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.

Chair comment

Commenting on the correspondence, Harriett Baldwin MP, 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 biggest high street banks have a particularly important role to play in encouraging saving. Currently, they are failing on that social duty. We look forward to receiving answers to these important questions in due course.”

Member comments

Dame Andrea Leadsom MP, member of the Treasury Committee, 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. At a time of rising profits, banks have the opportunity to do the right thing – and I’d encourage them to do so.”

Dame Angela Eagle MP, member of the Treasury Committee, 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.”

When the Committee began its inquiry into retail banks in February, the big four banks offered between 0.5 and 0.65 per cent easy access savings rates. Today, the big four offer rates between 0.9 and 1.75 per cent. The Bank of England interest rate is currently 5 per cent.

Further information

Image credit: CC / Bank of England Flickr