Financial watchdog calls in bank chiefs for savings rates grilling

Mortgages have soared across the UK in recent months. Credit: PA

Bank chiefs have been summoned to meet the financial watchdog today to discuss concerns interest rates for savers are lagging behind the rising cost of mortgage interest rates.

Bosses from HSBC, NatWest, Lloyds and Barclays are expected to attend the meeting with Financial Conduct Authority (FCA) officials on Thursday.

According to data from Moneyfactscompare.co.uk, the average easy access savings rate on offer on Wednesday was 2.48%.

Average two and five-year fixed rate mortgage rates recently broke through the 6% mark for the first time this year, having previously been above 6% during the market volatility that followed last autumn's mini-budget.

Banks to offer flexibility over mortgage inflation fears

The Bank of England base rate is currently 5%, after growing 13 times in a row as the Bank tries to subdue stubbornly high inflation.

The Treasury Committee has been pressing banks to address concerns about the savings rates being paid.

Dame Andrea Leadsom, a former Cabinet minister who sits on the committee, recently said: "It's quite clear they have failed to pass on the rise in interest rates to savers."

Policing Minister Chris Philp said it is "absolutely right" that the FCA is meeting with bank chiefs, adding it is "wrong" that some banks "haven't increased the rates they pay savers commensurately".

Crime and Policing Minister Chris Philp said public confidence in police has been severely damaged. Credit: PA

Providers have been making announcements about increases to their rates in recent days.

For example, Coventry Building Society unveiled a one-year fixed-rate Isa at 5.30% and a two year fixed rate Isa at 5.40% on Wednesday, which top Moneyfactscompare.co.uk's "best buy" tables.

Coventry said it continually reviews its savings range and tries to make interest rate decisions as quickly as possible".

Nationwide Building Society also announced some new savings deals on Wednesday, including the launch of a one year fixed rate Isa and one year fixed rate bonds paying 5.10%.

Last week, HSBC UK and First Direct also unveiled plans to boost savings rates.

From the end of July, a new consumer duty will be introduced by the FCA to force financial firms to put consumers at the heart of what they do.

The new duty sets higher and clearer standards of consumer protection across financial services, and requires firms to put their customers' needs first.

Asked previously whether the banks' behaviour amounts to profiteering, Prime Minister Rishi Sunak's official spokesman said: "It's something the regulator is looking into."

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