ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Advertisement

Image of Mike Brown

Michael Brown

Acting Editor
Published: 01/08/2023
FCA on cellphone

News contents

The FCA’s latest research says nine of the biggest savings providers have passed on 28% of base rate rises to their easy access accounts.

Yesterday, the Financial Conduct Authority (FCA) said it will require firms with the lowest-paying savings accounts to justify their rates by the end of August.

The probe came on the day when the UK’s chief regulator launched its Consumer Duty regulation. This is a set of rules which requires all regulated firms, like banks and investment platforms, to make decisions that are in the consumer’s interests. 

The Consumer Duty legislation will require firms to prove that their products offer customers “fair value”. This means, if required, firms will need to defend their pricing structure or rates on offer for customers.

“We welcome the progress that has been made so far but this needs to speed up. We will be using the Consumer Duty to ensure this is the case,” said Sheldon Mills, Executive Director of Consumers and Competition at the FCA.

Chancellor Jeremy Hunt also endorsed the FCA’s announcement.

“Banks should be passing on interest rate increases to savers, and we’re keeping a close eye on whether they do,” he said.

Where to find the best easy access deals?

Looking for a new easy access account? Make sure to do your research first before switching. Visit the Moneyfactscompare.co.uk charts for the best rates on the market.

Are providers passing on the base rate?

In addition to launching its new Consumer Duty regulation, the FCA also published its review of the savings market.

Its research found that nine of the biggest savings providers had passed on 28% of base rate rises to their easy access accounts between January and May this year. These providers hold approximately 60% of the country’s easy access deposits. 

These providers include Lloyds Bank, HSBC, NatWest, Santander UK, Barclays, Nationwide Building Society, TSB, Virgin Money and the Co-operative Bank.

Despite the fact that challenger banks and building societies typically offered the best rates, 75% of consumers with savings accounts kept their money with their current account provider.

The FCA said that this has enabled larger banks and building societies with lower rates to hold a larger share of the market.

“We continue to urge savers to shop around to take advantage of the increasing number of better saving deals available,” said Mills.

Government pressure

Last month the Parliamentary Treasury Committee continued its investigation into the savings rates on offer from some of the country’s biggest banks.

It questioned Barclays, HSBC, Lloyds Bank and NatWest on whether their savings rates provided “fair value” for their customers. All four banks responded to Parliament’s probe in a series of letters.

Despite the responses, Harriett Baldwin, Chair of the Treasury Committee, said savings providers with low rates need to make their customers aware that they have better paying accounts on the market.

“Given that the Government, regulator and Governor of the Bank of England agree with the Committee that action is required, the time for weak excuses is over,” she said.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

FCA on cellphone

News contents

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.