Lawmakers ask UK banks if they are ‘exploiting’ savers with low rates

LONDON, July 3 (Reuters) – British banks faced fresh criticism over the savings rates they offer to cash-strapped customers on Monday, in the latest speech by Parliament’s influential Treasury Select Committee.

The committee said it had written to the country’s “Big Four” banks – Barclays (BARC.L)HSBC (HSBA.L)Lloyd’s (LLOY.L) and NatWest (NWG.L) – asking if they believed their savings rates provided “fair value” and if customers’ inertia, or reluctance to switch accounts, was being taken advantage of.

“With interest rates rising and our constituents feeling pressured by rising prices, it’s only fair that the UK’s biggest banks raise their paltry easy-access savings rates,” Harriett Baldwin, chair of the committee, said in a statement. a statement. “The time for action is now.”

British banks have come under pressure from lawmakers and consumer activists for not conveying the scope of the Bank of England’s higher rates to savings customers.

The Treasury committee had criticized on June 8 the easily accessible savings rates of between 0.7% and 1.35% at a time when the central bank had raised the base rate to 4.5%. The base rate was raised to 5.0% on June 22, the highest since 2008.

Finance Minister jeremy hunt he also said last week that banks were too slow to pass on central bank rate hikes to savers and that the problem needed to be resolved.

Baldwin added that he believed banks were failing in their “social duty” to encourage customers to save.

HSBC said it had increased its savings rates more than a dozen times since the start of 2022, while Barclays said it regularly reviewed rates on savings products.

NatWest declined to comment, while Lloyds did not respond to a request for comment.

Senior bank executives were questioned by the Treasury committee about savings rates during a session in February.

A spokesman for banking lobby group UK Finance said rates on savings products were determined by a number of factors, including whether or not someone wanted instant access.

“Savings rates have increased and we always encourage people to find the product and interest rate that fits their needs,” the spokesperson added.

The Treasury committee said it had also written to the regulator, the Financial Conduct Authority (FCA), asking whether banks had responded to the pressure applied to them and what compliance steps could be taken under a “consumer duty” that It would go into effect at the end of this month.

The FCA said it would report by the end of the month on how well the cash savings market was supporting savers and had already asked major lenders to explain the extent of their interest rate pass-through.

Reporting by Iain Withers; Edited by Jason Neely and David Holmes

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