The UK’s Big Four banks, namely HSBC plc, Barclays PLC (LSE:BARC), Lloyds Banking Group PLC (LSE:LLOY) and Natwest Group plc, are failing in their “social duty” to provide adequate saving rates to their customers, the cross-bench Treasury Select Committee has warned.
Offering “measly” savings rates despite soaring interest rates netting record profits in the banking sector in 2022 is tantamount to “blatant profiteering”, the committee stated.
"With interest rates on the rise and our constituents feeling squeezed by rising prices, it is only right that the UK's biggest banks step up their measly easy-access savings rates," said Conservative MP and committee chair Harriett Baldwin. "The time for action is now."
Following 13 consecutive interest rate hikes issued by the Bank of England, the base rate for borrowing now stands at 5%. As a consequence, mortgage rates have soared past 6% on two-year fixed products.
Yet saving rates on standard easy-access accounts pale in comparison, with Barclays offering as little as 1% and NatWest 1.1%.
“This blatant profiteering has been shocking, and it’s clear to me this behavior is miles away from the incoming requirement for firms to treat their customers fairly and with respect,” she said.
However, savers willing to shop around can find better easy-access rates than what the Big Four are offering.
Paragon Bank offers a 2% rate on an easy-access account, while Chip offers as much as 4.21% variable.
The stern words from the Treasury Select Committee come a week after finance minister Jeremy Hunt demanded action from the banks to reward savers with fairer interest rates.
Hunt's comments drew criticism from the UK Finance trade body, which warned that higher savings rates will need to be offset by higher mortgage costs.
“If we wanted to pay savers more then we’d have to charge mortgage borrowers more,” said Eric Leenders, managing director of personal finance at UK Finance.