More banks criticised over poor savings rates: How does yours compare?

Four more well-known banks scrutinised by Parliament for not rewarding loyal customers.

Nationwide, Santander, TSB and Virgin Money are the latest banks and building societies to come under fire from the Treasury Committee for offering savings rates significantly below the current interest rate. This widens the Committee’s campaign for banks to increase the savings rates offered to loyal customers, which in March saw Barclays UK, HSBC UK, Lloyds Banking Group and NatWest Group called into question.

In letters sent yesterday, the Treasury Committee asked the banks to explain how increases to the base rate are passed on to savers, why rates on their easy access accounts are so much lower than the base rate, and whether they make loyal customers aware of higher rate savings options available to them.

The banks and building societies being scrutinised currently offer interest rates of between 0.25% AER and 1.25% AER on their respective easy access savings accounts. This is despite the Bank of England making 12 consecutive rises to the base rate, increasing from 0.25% in January 2022 to 4.50% today.

The Financial Conduct Authority (FCA) defines these banks as ‘scale challengers’ and reports that they account for a quarter of all personal current accounts. In comparison, some of the best easy access savings accounts can be found from smaller challenger banks and offer in excess of 3.50% AER.

Despite the recent criticism from the Treasury Committee, Barclays UK, HSBC UK, Lloyds Banking Group and NatWest currently offer rates between 0.70% AER and 1.30% AER on their easy access savings accounts - still well below the base rate. Financial results from the ‘big four’, however, detail strong growth in net profits.

According to Harriett Baldwin MP, Chair of the Treasury Committee, this shows how “the UK’s biggest banks are continuing to squeeze record profits from their loyal savers”. 

Baldwin also encouraged consumers to shop around for the best savings deals.

“This, more than anything, will drive the banks to increase their currently measly rates,” she said.

The same sentiment is echoed by Rachel Springall, Finance Expert at Moneyfactscompare, who said some savers may not be seeing much benefit from the recent rises to interest rates. 

“It will be down to savers to compare their accounts regularly and move elsewhere if they are getting a poor return on their hard-earned cash. Challenger banks and building societies are currently paying some of the best returns, so it is always worth considering the more unfamiliar brands that have the same deposit protections in place as a big high street bank,” she said. 

In the letters sent to Nationwide, Santander, TSB and Virgin Money yesterday, the Treasury Committee established 24 May 2023 as a deadline for responding to their questions. Any responses are expected to be made public on the Committee’s website.

Previously, Barclays UK, HSBC UK, Lloyds Banking Group and NatWest Group defended their savings rates, with three out of four refusing to disclose revenue generated through savings accounts.