The UK’s biggest banks - Barclays, HSBC, Lloyds, NatWest and Santander- have been accused of short-changing savers and failing to adhere to new rules about how they must treat customers.
According to data from comparison site Moneyfacts, the ‘big five’ high-street banks continue to offer easy access savings rates well below the average, despite the obligation to offer fair value to savers through the Financial Conduct Authority’s Consumer Duty rules.
Moneyfacts says the five banks all pay less than 2% on their most accessible no-notice accounts, “even though over 80% of the market currently pay 2% or higher on a £10,000 balance”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
James Hyde, a spokesperson at Moneyfacts, says: “The big five banks are still paying significantly sub-par variable savings rates. Their most accessible no-notice accounts all offer less than 2% interest per annum – putting them all in the bottom fifth of the market.”
Flouting the consumer rules
Under the Consumer Duty rules, banks, building societies, insurers, investment firms and financial advisers have all been warned they must improve and track how they communicate with and treat customers, including the types of products on offer.
The rules currently apply to newly-sold products but will cover all existing customers from 31 July 2024.
The Consumer Duty regulations regarding existing products have been in effect since 31 July 2023, Hyde adds, “meaning companies have had almost a year now to review any previously uncompetitive products, and bring them into compliance with the rules laid out by the Financial Conduct Authority”.
Moneyfacts says the big five banks’ no-notice accounts pay an average of 1.69% interest between them - 1.43 percentage points less than the market average across all available easy access accounts. The current Bank of England base rate stands at 5.25%.
“As always, customers are encouraged to proactively monitor savings rates, particularly if they’re on a variable rate which providers can adjust on a very reactive basis,” adds Hyde.
“People should be prepared to switch if they feel their loyalty is not being adequately rewarded.”
Poor rates on cash ISAs
Moneyfacts also found that the five banks’ easy access cash ISA rates are even less competitive. While HSBC does not currently offer any easy access ISAs to new customers, the remaining four big lenders offer an average of 1.62% on their easy access ISAs – less than half the market average of 3.31%.
Hyde says: “Currently, a saver who put £10,000 in an easy access ISA offered by a big bank would lose out on £169 in interest each year compared to the market average rate paid, or £344 on a market-leading account.”
After 14 consecutive base rate hikes, savings rates reached a 15-year high last year, but mostly from small bank providers and challenger banks like Starling.
But since the BoE froze interest rates at 5.25% four times, MoneyWeek has seen savings rates fall as a result since November, making it important to grab the best savings rates while you can.
-
Nvidia shares lose 16% – technical blip or cause for concern?Nvidia’s stock has experienced a sharp sell-off in recent days. Is the chipmaker overvalued?
-
Half of pension savers have 'no idea' they are being charged feesNews Research shows 50% of Brits are unaware that they are paying fees on their pension pots
