Banks admit they need to 'do more' for depositors suffering from ultra-low incomes

Bank executives, including Lloyds CEO Charlie Nunn, have been called to the FCA due to poor returns on depositors. Credit: Holly Adams/Bloomberg

The UK's biggest lenders have admitted they must 'do more' to help savers, after the city's watchdog brought in executives to explain why returns have been so low.

On Thursday, senior bankers from NatWest, Lloyds and Barclays and HSBC met with Financial Conduct Authority (FCA) officials to discuss concerns that banks are cashing in on higher interest rates.

After the meeting, the FCA said: «Those in the room acknowledged that they need to do more to help their consumers access better rates.»

Over the past few months, lenders have faced harsh criticism from politicians and activists consumer protection for failing to raise rates for savers as quickly as they did for mortgage products.

The average interest rate on a two-year fixed-rate mortgage jumped to 6.26%, while the average easy-access savings account pays only 2.36%, according to Moneyfacts data.

3006 Rising savings rates do little for borrowers

This is well below the inflation rate of 8.7% in May, which means savers' balance sheets are losing value in real terms every month. Large banks tend to pay some of the lowest savings rates on the market.

The FCA said it has been «challenging firms that have been slow to make decisions» in recent months.

Ahead At the meeting, Lloyds and HSBC increased their savings rate in a sign that pressure from regulators and ministers has taken its toll. fruit.

The watchdog said: “We have begun to see some positive action from banks and building societies to raise their rates and ensure their customers benefit from better value products. Now we want this progress to accelerate.”

Lloyds Bank, which owns Halifax and Bank of Scotland, on Thursday raised the rate on a number of its savings accounts, including the Easy Saver and Cash Isa Saver accounts, from 0.9% to 1.1% on balances ranging from £1 to £9,999 sterling.

The rate on one-year fixed-rate bonds and cash Isa increased from 4.95% to 5.45%.

Meanwhile, HSBC increased the standard rate on its Loyalty Isa program from 2.1% to 2.3%. Its annual fixed account also increased from 4.4% to 5.05%.

0406 inflation

The FCA is currently reviewing to make sure savers are benefiting from higher rates. On Thursday, the company said it would release its review at the end of July and «indicate whether further steps are needed.»

However, Sheldon Mills, FCA's head of competition, who chaired Thursday's meeting, downplayed the possibility of direct regulatory intervention in market. He said, «It's not for me to set the rates for the banks.»

Harriett Baldwin, Chair of the Treasury Committee, said: “While it is good to hear that banks are recognizing the need for further action, it is time to see the process speed up. We will be monitoring developments closely and will be particularly alert to any apparent delays.”

Separately, Andrew Bailey accused some retailers of profiting from inflated gasoline and diesel prices, warning that regulators must address the issue. to help attract price cuts.

A Bank of England governor criticized for driving the fastest price increases of any major economy said the action would help families 'save money' and deal with rising costs housing. life.

In an interview with the BBC, he said: «If you look at gasoline prices, some gasoline sellers may be charging too high for it.

«Here it's important [not overcharging], it helps us with inflation, but it will be fairer if these problems are solved.”