UK bank bosses have been summoned to a meeting with the financial watchdog this week amid mounting concerns that they are profiting from rising interest rates by offering paltry savings rates to customers.
Executives from the big high street names Lloyds Banking Group, NatWest, HSBC and Barclays, as well as from smaller lenders, are due to attend a meeting at the Financial Conduct Authority (FCA) on Thursday to discuss concerns that savings rates are lagging far behind the soaring costs of mortgages and loans. The Bank of England has raised its base rate to 5% and further increases are expected. The move has pushed the average rate of a two-year fixed mortgage to 6.47%, according to Moneyfacts, while the average rate on an easy access savings account is 2.45%. The FCA summoned UK bank bosses as part of its investigation into the savings market, which will result in a report later this month. The regulator’s executive director of consumer and competition, Sheldon Mills, who will lead the meeting, also hopes it will focus minds before the FCA’s new consumer duty regulations come into force at the end of July, the Guardian understands. The new rules will require all City firms including banks to explain pricing decisions, including how quickly they raise savings rates, and show they are acting in good faith and prioritising customer needs. The meeting, which was organised nearly two weeks ago, will take place days after MPs on the Commons Treasury committee accused high street banks of “profiteering” and failing in their “social duty” to promote saving, resulting in a fresh round of letters to the chief executives of the UK’s four largest lenders. The committee’s chair, the Conservative MP Harriett Baldwin, described the savings rates being offered by banks as “measly”.
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