22nd March 2023

UK’s biggest banks respond to Treasury Committee on savings rates

The Treasury Committee today publishes responses from the UK’s biggest high street banks and writes to the financial regulator on low savings rates.

Last month, the Committee questioned how the top four retail banks determine what proportion of interest rate rises to pass on to their savings customers, and whether chief executive remuneration is linked to profits from their savings businesses.

When the letters were sent, the banks all offered less than one per cent for their easy access savings accounts. Since the Committee’s involvement, HSBC has increased its rate to 1.2 per cent and NatWest has increased its rate to one per cent.

The cross-party Committee of MPs asked how many branches the banks intend to close in the next two years, the number of business bank accounts closed without a customer’s permission, and the proportion of customers re-mortgaging with their current provider.

The responses - from Barclays UK, HSBC UK, Lloyds Banking Group and NatWest Group - can be read in full here.

Banks outline that around 20 per cent of their easy access savings accounts hold over £5,000. In light of this, the Committee today writes to the Financial Conduct Authority (FCA) asking what work the regulator has conducted to ensure the UK’s savings market is competitive.

Given banks have reported increases in their net interest margins, the MPs ask what analysis the regulator has conducted on whether banks are earning disproportionate profits by increasing rates on mortgages far quicker than rates on savings products.

In light of news that between half and three quarters of customers re-mortgage with their current provider, the Committee asks if the FCA would expect a greater number of people switching to a different provider in a more competitive market.

Commenting on the correspondence, Harriett Baldwin MP, Chair of the Treasury Committee, said:

“While consumers should continue to shop around for the best rates, the information we’ve received from the UK’s biggest high street banks demonstrates there is much more that can be done.

“We anticipate that the financial regulator will want to look into this issue in further detail, in particular whether the market is truly competitive and if retail banks are relying on customer inertia to keep savings rates low.”

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