Lloyds Banking Group PLC (LSE:LLOY) was among the few big-name lenders to lift savings rates ahead of scrutiny from the UK’s financial watchdog on Thursday.
Alongside HSBC, Lloyds announced interest rates on the likes of its variable and fixed savings accounts will be lifted next week as banks prepared for a grilling from the Financial Conduct Authority.
Regulators were expected to lay into Lloyds, HSBC, Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG) at the meeting on Thursday over concerns that a visible gap has appeared between savings and mortgage rates.
According to industry sources, banks could well make concessions in response, after pressure has mounted over lenders’ offering rates well below UK base interest of 5%.
Average interest rates to Tuesday 4 July - Source: MoneyFacts
For instance, average two-year fixed mortgage rates currently sit at 6.52%, as per Moneyfacts data, 4.03 percentage points above a typical easy-access savings account.
Lloyds Banking Group’s rate hikes will spread to subsidiaries Halifax, Bank of Scotland and, of course, Lloyds meanwhile, benefiting savers’ accounts by as much as 1% from July 12.
HSBC will lift interest on fixed-rate and individual savings accounts from July 7 too, the bank also announced on Thursday morning, with interest increasing by as much as 0.65%.
Bob Wigley, chairman of industry body UK Finance, defended banks on Thursday though, arguing strong savings deals were there if people looked for them.
“It isn’t actually about the lack of availability of good savings rates,” he told Sky News, “a lot of people don’t know this and even those that do often don’t spend the time to move their deposits around and take advantage.
“What we’ve got to do as an industry is make sure we’re communicating really robustly with our customers.”
Analysts agreed, suggesting “shopping around” for better rates could be particularly effective at the moment, with many smaller lenders often offering stronger deals.
“It’s undoubtedly a pain in the neck to move bank accounts, but if you’re getting nothing, or next to nothing, from your cash account, the rewards of doing so are high right now,” AJ Bell analyst Laith Khalaf commented.