Some of Britain’s largest banks have defended against accusations that they are profiteering by lifting interest rates on mortgages faster than savings as base rates climb.
Lloyds Banking Group PLC (LSE:LLOY), NatWest Group PLC (LSE:NWG), Barclays PLC (LSE:BARC) and HSBC Holdings PLC (LSE:HSBA) all pled innocence after the Treasury select committee quizzed why savings rates were slow to rise.
The four offer between 0.9% and 1.75% on easy access accounts, according to the committee, below the UK-wide average of 2.62%, as per Moneyfacts data.
Rates on such accounts had flagged 4.02 percentage points behind typical two-year fixed rate mortgage earlier this month meanwhile.
Responding to the Treasury select committee, chief executives of the respective banks explained how they met the UK’s consumer duty rules – designed to protect customers.
Each laid out how their products catered for a range of customers, while pointing to the highest savings rates, which have indeed begun to creep up after this month's regulatory grilling.
“Transparency is a key principle for us,” Lloyds boss Charles Alan Nunn wrote.
“Our principles ensure that our products are designed with a clear target market, so customers get the right product for their needs [and] that switching is easy”.
“We believe our savings products and proactive outreach is inherently aligned with both the spirit and letter of the Consumer Duty by design,” Barclays’ Matt Hammerstein said meanwhile.
“[These are] tailored to the needs of different customer groups.”
Last month marked a busy period of mortgage rate changes, with lenders pulling deals off the market in droves in anticipation of the Bank of England’s latest base interest rate hike.
NatWest chief Alison Rose argued that savings rates had typically been revised four to six weeks following hikes though.
“This is similar to how standard variable rate mortgages have been repriced over the same period,” she claimed.
Aside from mortgage holders likely feeling the pinch of higher rates, analysts have also warned that savers should be wary of being tipped over their tax-free brackets.
Urging the government to lift personal allowances on savings accounts early this week, which have been frozen since 2016, AJ Bell pointed out that while good interest was indeed there for customers who shopped around, many could increasingly be taxed without knowing.