Bank Chief Executives have been summoned to a meeting today by the Financial Conduct Authority (FCA) over concerns about the abysmally low interest rates on savings accounts, and accusations of profiteering.
With a similar voice, Chancellor Jeremy Hunt tweeted earlier this week indicating he is of the same mind as the FCA as he said: “Increased interest rates must also be passed on to savers. @TheFCA has my full backing to ensure banks are passing on better rates as they should be.“
While mortgage costs have skyrocketed due to soaring interest rates, savers have been left in the lurch as their rates remain stagnant.
The FCA has called upon the leaders of Lloyds, HSBC, NatWest, and Barclays to convene today to address these pressing concerns.The FCA is in place to protect consumers, support a healthy financial system and promote effective competition.
The CEO of Mycommunityfinance.co.uk, Tobias Gruber said:“The FCA’s intervention to hold UK’s high street banks accountable is a long-awaited battle cry against their unjust practices. Despite making billions from borrowers through swift interest rate hikes in the past year, these banks have shamelessly neglected savers, leaving them in the shadows.”Passing on interest rates to savers is vital to maintain trust in the banking system, promote responsible saving habits, incentivise individuals, and contribute to overall economic stability”.
Andy Mielczarek, Founder and CEO of SmartSave, a Chetwood Financial company, said: “Customers should be rewarded for their loyalty, not punished. After months of pressure from both the Government and regulators, the fact that many high street banks are still failing to pass on base rate hikes to savers means they are falling short of their duty to loyal customers.
“High street lenders are often quick to pass on increases in the base rate to borrowers, while the savings market lags behind. Currently, the average two-year homeowner mortgage rate sits at 6.42%, while savers have to make do with a measly 2.45% on the average easy-access savings account – this isn’t the ‘fair value’ that customers need in the middle of a cost-of-living crisis, particularly for longstanding customers who may be less comfortable with online banking.
“It has never been more important for savers to consider all of their options and shop around for better rates. Some of the most competitive products on the market right now come from challengers, while many fixed-rate accounts are topping the base rate.”
Lily Megson, Policy Director at My Pension Expert said: “It is distressing that financial services firms still aren’t putting clients first. Higher interest rates ought to mean better returns for savers. Yet, despite soaring profits, many banks are failing to reward their loyal customers through better rates on savings products. It’s a slap in the face for hardworking Britons who are feeling the financial squeeze of the cost-of-living crisis, and it is only right that the FCA investigates the issue.
“Loyalty should be rewarded, not taken advantage of. And this certainly applies to those in their 50s and 60s, who have typically accumulated greater savings pots but might be less likely to switch between financial providers. Not enough is being done to protect the interests – and interest rates – of those nearing retirement.
“Until action is taken, it is essential that savers consider all the options that are before them. However, in the hunt for better rates, any decisions must be taken after careful consideration – where people’s hard-earned retirement savings are concerned, seeking independent financial advice is a must. This will ensure their money works hard for them, but also that they remain on track to meet their individual financial goals.”
Moshin Rashid, CEO of ZIPZERO, said: “Where is the solidarity being shown to loyal customers? As we’ve seen time and time again over the past 18 months, retail banks are happy to pass on higher interest rates to borrowers at lightning speed – yet drastically trail behind in boosting savings rates.
“While consumers continue to battle astronomic inflation, over the long-term, better interest rates could help boost the dwindling real-term values of savings. In the short term, it would encourage savers to save, helping to soften inflationary pressures.
“Despite the current economic climate, it seems as though a consistent theme of overcharging by large corporations has emerged across sectors. Consumers are rightly fed up with this, so it is encouraging that the FCA is investigating this issue.
“While we await the outcome of this investigation, I would encourage consumers to be savvy and unafraid to shop around to find the best products. Meanwhile, banks and retailers more generally should consider the long-term impact of their decisions – those that reward loyalty and support consumers through these challenging times will be the ones to emerge strongest.”