The Treasury Committee has today escalated its campaign calling for an increase in banks’ savings rates, posing challenging questions to the largest high street lenders and the regulator, the Financial Conduct Authority (FCA).
This campaign comes as the FCA plans to introduce the consumer duty at the end of July. This requirement will mandate firms to act in good faith and deliver ‘fair value’ to their customers.
In the latest correspondences, the cross-party Committee of MPs has enquired whether the banks believe their savings rates offer ‘fair value’ and whether customer inertia is being exploited.
The Committee has further probed whether banks are confident their current savings products align with the consumer duty, how the new rules will impact customer interactions, and what actions they are taking to inform customers of higher rates available.
Alongside this, the Treasury Committee has written to the FCA questioning whether the banks have modified their savings rates in response to the regulator’s challenge. The Committee is also seeking clarification on how the regulator will assess ‘fair value’ for customers and what enforcement action can be taken if firms do not comply with the consumer duty.
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.”
Fellow Committee members Dame Andrea Leadsom MP and Dame Angela Eagle MP also voiced their concerns, pointing to the vital role banks play in society and their responsibility to pass on interest rate rises to savers, particularly in the face of increasing profits.
This action follows the Committee’s inquiry into retail banks in February, which highlighted that the big four banks offered between 0.5% and 0.65% easy access savings rates.
Today, the same banks offer rates between 0.9% and 1.75%, while the Bank of England interest rate stands at 5%.
