The Treasury Select Committee said that offering “measly” savings rates despite surging interest rates fetching record profits in the banking sector in 2022 is tantamount to “blatant profiteering”
The UK’s Big Four banks – HSBC plc, Barclays PLC, Lloyds Banking Group PLC and Natwest Group plc, are failing in their “social duty” to offer appropriate saving rates to their customers, the cross-bench Treasury Select Committee has cautioned.
The committee said that providing “measly” savings rates in spite of surging interest rates fetching record profits in the banking sector last year is tantamount to “blatant profiteering”.
Conservative MP and committee chair Harriett Baldwin said, with interest rates on the up and our constituents feeling pressed by increasing prices, it is only right that the UK’s largest banks raise their measly easy-access savings rates. The time for action is now.
After 13 successive interest rate hikes by the BoE, the base rate for borrowing now sits at 5 per cent. As a result, mortgage rates have surged beyond 6 per cent on two-year fixed products.
Still, saving rates on standard easy-access accounts fade in comparison, with Barclays offering as little as 1 per cent and NatWest 1.1 per cent.
She added that this open profiteering has been shocking, and it is clear to me this behaviour is miles away from the incoming requisite for companies to treat their customers fairly and with regard.
Nevertheless, savers prepared to shop around can find better easy-access rates than what the Big Four are providing.
Paragon Bank provides a 2 per cent rate on an easy-access account, while Chip provides as high as 4.21 per cent variable.
The strong words from the Treasury Select Committee come a week after finance minister Jeremy Hunt demanded action from the banks to reward savers with fairer interest rates.
Hunt’s remarks drew denunciation from the UK Finance trade body, which cautioned that higher savings rates will require to be balanced by higher mortgage costs.
If we wanted to pay savers more, then we would have to charge mortgage borrowers more, stated Eric Leenders, MD of personal finance at UK Finance.