Britain's banks told to justify low savings rates by end of August
By Huw Jones
LONDON (Reuters) — Britain's banks and building societies have until the end of August to justify to regulators why some of their savings rates are low or face sanctions, the markets watchdog said on Monday, as Bank of England rates look set to rise to their highest since 2008.
While the sector has been passing on higher interest rates rapidly to mortgage customers, lawmakers have criticised lenders for not upping rates on savings worth around 1.5 trillion pounds ($1.9 trillion) at the same speed, amid a cost-of-living crisis.
The Financial Conduct Authority (FCA) set out an action plan to enforce a new duty to customers after a review found that nine of the biggest savings providers, on average, passed on only 28% of BoE rate hikes to easy-access deposits between January 2022 and May this year.
The firms — Lloyds (LON:LLOY), HSBC, NatWest, Santander (BME:SAN) UK, Barclays (LON:BARC), Nationwide Building Society, TSB Bank, Virgin Money (LON:VM) UK, and the Co-operative Bank — passed on 51% to notice-period and fixed-term deposits over the same period.
Smaller lenders offer higher savings rates than their bigger rivals, the FCA added.
«Firms offering the lowest savings rates will be required to justify by the end of August how those rates offer fair value, according to the consumer duty that enters into force today,» the FCA said in a statement.
«If they are unable to do so, the FCA will take action.»
The new duty requires firms regulated by the FCA to compile evidence that they are ensuring «good outcomes» for customers across products, services, value and after-sales support.
Banks and building societies offering the lowest rates have to complete a «fair value» assessment for the regulator by the end of
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