FCA to grill banks on failure to pass higher interest rates onto savers - reports

investmentweek.co.uk:

HSBC, NatWest, Lloyds and Barclays are among the banks expected to meet with the regulator on Thursday.

HSBC, NatWest, Lloyds and Barclays are among the banks expected to meet with the regulator on Thursday (6 July), according to a report by the Financial Times.

The difference in speed at which banks have raised mortgage interest rates as the Bank of England has increased the Base Rate is in marked contrast to the reluctance with which these same lenders have improved rates for savers, leading to accusations of profiteering.

The Bank of England took the base rate to 5% in June, its 13th consecutive rise as it tries to lower inflation. Mortgage holders have borne the brunt of the increases. The average rate on a two-year fixed-rate mortgage has leapt to 6.42%, according to Moneyfacts.

Bank of England increases rates by 50bps to 5%

But on the flip side, after years of rock bottom rates, savers are not benefitting at the same level. The average rate on an easy-access savings account is only 2.43%, with many large banks offering much lower rates. 

It is expected the FCA and the banking executives will discuss the pricing of cash savings and how banks communicate with their customers on rates. The meeting could result in a «savings charter», or set of commitments.

One person familiar with the matter told the Financial Times: «We are not happy with some of the lower savings rates we see, and we want banks to be supporting customers... and people to be able to make informed choices.»

However, some of those due to attend the meeting, which includes smaller lenders, warned the FCA intervention was a regulatory over-reach.

«The worry is you end up in a situation where you have regulators trying to dictate price: that is a