Savings rates: Big banks to meet regulator this week after ‘blatant profiteering’ claims
Banks will meet with the regulator this week to discuss the savings rates on offer as pressure grows on the UK’s largest lenders to avoid so-called ‘profiteering’.
Heads of the largest UK banks – including Lloyds, NatWest, Barclays and HSBC – will meet with the Financial Conduct Authority on Thursday, according to people familiar with the matter.
Although a range of proposals have been suggested – including a ‘savings charter’ to mirror the mortgage charter signed last week – City PM understands the regulator is not pursuing any specific outcome.
The news was first reported by the Financial Times.
The UK’s largest banks have been under increasing fire from regulators and legislators in recent months after the savings rates on offer have trailed the Bank of England’s base rate.
While the base rate stands at five per cent, the big four banks offered savings rates of between 0.9 per cent and 1.75 per cent, according to the Treasury Committee.
The FCA has been in communication with bank executives over the low savings rates for the last few months.
The incoming Consumer Duty, which comes into force at the end of this month, will ask firms to “explain and justify their pricing decisions”, including on savings rates. The regulator will assess whether the products offer ‘fair value’ to consumers.
MPs on the Treasury Committee have accused banks of “blatant profiteering” and asked the regulator what efforts it would take to clamp down on.
Conservative minister Johnny Mercer told Sky News this morning that “you don’t want to see any profiteering like this, particularly when life is really tough for people out there at the moment around interest rates.”
The banks argue that there are a range of savings products available for consumers, many of which offer higher rates. One possible outcome of the meeting is that banks are required to signpost these products more clearly to consumers.
An FCA spokesperson said: “We will report by the end of the month on how well the cash savings market is supporting savers.
“This includes requiring the largest banks and building societies to explain the pace and extent of their pass through of interest rates, and how they are proactively supporting customers to switch to suitable high interest rate products,” they continued.