The FCA has called on Britain’s top banks to raise the savings rates after a chief executive meeting. Generally, the executive concluded to implement more support for customers after allegations they were profiting from higher interest rates. The Financial Conduct Authority says it concluded a constructive meeting with the bank leaders, challenging their slow decision process. They included Charlie Nunn, Matt Hammerstein, Ian Stuart, and Alison Rose.
Representing Lloyds Banking Group, Barclays, HSBC, and NatWest respectively, they pushed to justify their plan to allow easy access to low-rate loans. A typical easy-access savings account rate is at 2.49%, while the two-year fixed mortgage rate was about 6.52% on Thursday. Meanwhile, after the meeting, HSBC and Lloyds announced a raise on some savings accounts. The banks said they recognize their role in helping users to acquire better rates.
The Financial Conduct Authority also summoned small-scale lenders like TSB, Santander UK, and Nationwide at the headquarters, led by the executive director of competition & consumption. Besides, the UK Finance chief executive and the Treasury officials summoned the meeting. This meeting comes amid FCA’s report on the savings market later this month. But financial regulators used it to warn lenders they will justify their loan rates.
The process for justifying pricing will become effective once the new consumer duty regulations become effective by the end of July 2023. In any case, the new rules force City businesses like high street lenders to showcase they prioritize customer needs and act in good faith in their mortgage rate and savings decisions. The four major banks reported bumper returns through the year's first quarter, benefiting from the net interest income surge.
Lloyds recorded a 46% increase in earnings, while NatWest recorded a 50% profit rise to £1.9bn over the last three months. On the other hand, Barclays announced its most significant profit since it started in 2011, and HSBC tripled its returns in the first quarter to $12.9 billion in profits. The influential Treasury committee MPs accused banks of neglecting their social duty to promote saving and profiteering from the circumstances.
They vowed to follow up with the developments and were particularly alert to foot-dragging plans. In the meantime, Barclays says it will regularly review its savings rates. But HSBC claimed that it raised savings rates several times since 2022, and its accounts provided customers choice in managing their money through competitive returns. The bank said they not only give a competitive savings market but also offer an array of accounts with different features.
