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Financial Conduct Authority
The Financial Conduct Authority talked to executives of UK-listed banks yesterday to address concerns that savings rates for customers are too low.

Senior bankers at Natwest, Barclays, HSBC and Lloyds met the UK regulator to discuss the pricing of cash savings and how banks communicate with their customers on rates.

Earlier this week, the UK parliament's Treasury committee said it had written to the banks to ask if they thought their savings rates provided "fair value" and if customer inertia was being exploited.

The issue is politically sensitive in light of how borrowing costs have soared for millions of mortgage-holders in the UK, while it is sometimes overlooked that millions are also savers. As this news service regularly notes, the net interest margins of banks have widened this year as rates have risen. In some nations, such as Switzerland, this was after years of negative official rates.

In a statement issued yesterday after the meeting, the FCA said: “We held a constructive meeting today, which builds on work we have been doing over several months – to monitor the savings markets and the decisions made. We have challenged firms where their decision-making has been slow.

“Through preparation for our new consumer duty, which requires the firms we regulate to put consumer interests at their heart, we have started to see some positive action by banks and building societies to improve their rates, and to ensure their customers are benefiting from better value products. We now want to see that progress accelerate. We are also increasingly seeing customers switching their savings products to those with higher rates. We continue to urge savers to shop around to make sure they’re getting the best deal.

“We have previously committed to reporting at the end of the month on how the savings market is supporting savers to benefit from higher interest rates. We will set out then whether further steps are needed,” it added. 

Repairing margins
Arguably, banks need to replenish their coffers by retaining a gap between deposits and borrowing rates after years of ultra-low official rates.

Whatever the economics, the optics of deposit rates not keeping pace with rate rises is poor, and an easy target when cost-of-living concerns are intense.

"The FCA's intervention to hold UK's high street banks accountable is a long-awaited battle cry against their unjust practices,” Tobias Gruber, CEO of Mycommunityfinance.co.uk, said. “Despite making billions from borrowers through swift interest rate hikes in the past year, these banks have shamelessly neglected savers, leaving them in the shadows.”

"Passing on interest rates to savers is vital to maintain trust in the banking system, promote responsible saving habits, incentivise individuals, and contribute to overall economic stability,” he added.