Banks stand accused of ‘filling their boots’ ahead of new rules meant to give savers a better deal.
Lenders are under fire for not extending a series of rate rises to savings accounts while ramping up mortgage and other borrowing costs, leading to bumper profits.
The six biggest lenders last year made £44 billion in net interest – the difference between what they pay savers and charge borrowers. That was £8 billion more than in 2021 when rates were almost at zero.
The benchmark base rate – now 5 per cent – is set to go even higher as the Bank of England tries to curb inflation running at 7.9 per cent.
Banks are on course to make more money this year, despite new ‘consumer duty’ rules coming in this month to protect savers.
‘Filling their boots’: Lenders are under fire for not extending a series of rate rises to savings accounts
‘The banks have been profiteering at the expense of customers over the past year,’ said James Daley, of consumer campaign group Fairer Finance. ‘They know consumer duty won’t allow them to act like this in future, so are filling their boots while they can.’
The new rules were drawn up by the Financial Conduct Authority. The watchdog’s boss Nikhil Rathi told MPs last week they would require some banks to make ‘a significant cultural shift’ to deliver value to savers, but the FCA was not a price regulator he said.
MPs noted that the four biggest banks – Lloyds, NatWest, Barclays and HSBC – offer easy access savings accounts paying 0.9 to 1.75 per cent – below the average 2.62 per cent cited by website Moneyfacts.
Banks insist they have passed on 60 per cent of recent rises to savers. They also claim they cannot notify customers of best rates because of data protection laws.
But regulators dismiss this, saying rules on duty of care to consumers mean lenders can send neutral, factual information on securing higher rates, even to those who opt out of direct marketing.
‘Even if banks do communicate any better accounts they have to loyal customers, savers are likely to be able to earn far more elsewhere,’ said Anna Bowes of the Savings Champion website.
Harriett Baldwin, chair of the Treasury Select Committee looking into banks, said: ‘The time for weak excuses is over. We will continue to monitor closely, especially when banks report half-year results.’
On Wednesday Lloyds is expected to post first-half profits of £2.9 billion. Two days later NatWest – which owns Coutts private bank – is set to reveal profits of £2.4 billion.
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