Major banks summoned to meet financial watchdog over 'measly' easy access savings rates

The bosses of the country's four main lenders have been summoned to a meeting with the financial watchdog as they face pressure to raise "measly" easy access savings rates.

The Financial Conduct Authority (FCA) expects chief executives from HSBC, NatWest, Lloyds and Barclays to attend on Thursday amid allegations of "blatant profiteering".

It comes as the Treasury Committee of MPs said it had written to the chief executives to demand that savers are fairly rewarded.

Lenders have been accused of being quick to reflect Bank of England rate hikes in their borrowing costs - hurting the likes of mortgage holders - but acting slowly to pass on rate rises to those able to squirrel away some cash as the cost of living crisis evolves.

Dame Andrea Leadsom, the former cabinet minister who sits on the Treasury Committee, said that "it's quite clear they have failed to pass on the rise in interest rates to savers".

Colleague Dame Angela Eagle added: "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."

The letter to bank bosses asks if they believe all their savings rates provide "fair value" to customers and whether customer inertia is being exploited.

It effectively questions whether they would currently comply with the new consumer duty rules, due to kick in at the end of the month.

The change in the regulatory demands of lenders forces them to put consumers at the heart of what they do.

Treasury committee chair, Harriett Baldwin, 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."

She told Sky's Business Live with Ian King that the major lenders were taking advantage of people such as the elderly who needed high street services.

"For our constituents who are, perhaps, not comfortable with internet banking... we think that these customers are being particularly badly treated," she said.

Another member, Labour's Dame Angela Eagle, said: "In the middle of a cost-of-living crisis, the high street banks are squeezing higher profits from their loyal savings customers."

After 13 consecutive increases, bank rate - the UK's base-level interest rate - currently stands at 5%.

The average two-year homeowner mortgage rate on the market is 6.42%, according to data from financial information website Moneyfactscompare.co.uk.

It had stood at a level closer to 2.5% before the Bank of England's cycle of rate rises began in December 2021.

The data showed that the average easy access savings rate on the market currently stood at 2.43%.

Savers looking for a one-year fixed-rate account, however, can get 4.82% typically.

Chancellor Jeremy Hunt issued a similar plea for banks to pass on rates to savers last month after securing an agreement on the help being offered to mortgage-holders.

Bank of England data last week showed a record net sum withdrawn from savings accounts during May as households continue to struggle amid stubborn inflation.

The banking sector, which has stepped up the pace of rate hikes for savings products in recent months, has urged consumers to shop around for deals that suit them best.

Speaking to Sky News's Kay Burley on Tuesday morning, veterans minister Johnny Mercer accused the banks of profiteering.

"Interest rates are going up and the government wants to see those passed on to savers. 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."

"It doesn't sound good and I suspect the Treasury will look at it today."

Shadow chief secretary to the Treasury Pat McFadden was also asked if banks were profiteering, saying, "you could use that word".

"Because apart from anything, this is how a rise in interest rates is supposed to work, it is supposed to encourage people to save. But how can you encourage people to save if you're offering really pitifully low savings rates?"

-sky news