The big banks have been treating loyal savers poorly for as long as I can remember, but I’ve never known things to be as bad as they are today. They have steadfastly refused to pass on Bank of England base rate increases, despite threats from MPs and regulators. Now we need to see action.
Consumer champion Which? has issued shocking new research showing how rates on high street savings accounts dramatically trail those offered by building societies and the new breed of challenger banks.
This is particularly startling because this summer they came under direct pressure to clean up their act, backed by threats of penalties. Yet they still haven’t done so.
Earlier this year, MPs on the Treasury Select Committee accused the big banks of profiteering and failing in their social duty to promote saving, by offering customers “measly” returns.
In July, City watchdog the Financial Conduct Authority (FCA) summoned senior executives from big four banks Lloyds Banking Group, NatWest, HSBC and Barclays to a meeting, along with a number of smaller lenders.
The FCA warned it would crack down on those that fail to pass on interest rate hikes to loyal customers.
New consumer duty regulations now require all City firms, including the banks, to explain pricing decisions and show they are acting in good faith and prioritising customer needs.
We hailed that as victory in our campaign to demand that banks stop ripping off savers.
Have the rules made any difference? Apparently not. Will anybody be surprised? Well are you?
Which? found that most high street banks have failed to make substantial improvements to their easy access rates since the FCA read them the riot act.
Between October 2022 and October 2023, the BoE hiked base rates seven times from 2.25 percent to 5.25 percent, a climb of three percentage points.
Yet over the same period, the big banks hiked their average easy access rates from just from 0.42 percent to 1.98 percent, a rise of just 1.56 percentage points.
Building societies did notably better, raising their easy access rates by 1.97 percentage points from 0.96 percent to 2.93 percent.
Smaller, hungrier challenger banks were most competitive with an average hike of 2.31 percentage points, lifting their average rates from one percent to 3.31 percent.
That’s more than double what the big banks pay.
Of the big names, only NatWest-owned Ulster Bank has been paying an above average easy access rate, Which? found.
Ulster’s Loyalty Saver pays 5.2 percent on balances of £5,000 and above. Incredibly, every other easy access from the big banks paid less than two percent.
Which? has named and shamed the worst offenders. On October 2, HSBC was paying 1.9 percent, with Barclays offering just 1.65 percent, Halifax down at 1.5 percent and Lloyds bottom of the list with just 1.4 percent.
Which? said the big banks have worked a little harder to improve returns on their one-year fixed rate savings bonds.
Despite that, only Barclays pays an above average rate.
And none of them – including Barclays – made it into the top half of fixed-rate deals on offer.
Frankly, they aren’t even trying.
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Which? Money editor Jenny Ross said despite growing pressure big banks “still aren’t getting the memo”, making the cost-of-living crisis worse for millions of savers. “Firms must act urgently to improve their rates or face tough action from the regulator by the end of the year,” she said.
Adam Thrower, head of savings at challenger bank Shawbrook, urged savers to make their money work harder. “Check your rates to see if you are on the best possible deal and get ready to move when coming to the end of a fixed-rate bond.”
Anna Bowes, founder of savings rate tracking site Savings Champion, said the big banks rarely appear in the savings account best buy tables and customers need to vote with their feet. “This is particularly important as we near peak interest rates.”
We saw what the greedy banks were like during the financial crisis, when taxpayers had to spend tens of billions bailing them out. Their behaviour hasn’t changed a jot. They cannot help themselves.
If banks won’t get the memo, savers can’t afford to ignore it. If you have an account with a bank on the Which? list of shame, get moving.
