The Financial Conduct Authority has summoned the heads of Britain’s largest banks for questioning over interest being paid to savers, according to reports.
The chief executives of Barclays, HSBC, Natwest and Lloyds have been asked to attend a meeting on Thursday 6th July, the Financial Times has reported.
The concerns centre on the rates being offered on cash savings relative to the Bank of England base rate. With the central bank raising rates to 5% last month, it appears regulators are losing patience with banks offering savers interest which is similar to that available before the hiking cycle began.
Instant access savings rates remain around 1% at the major banks, despite the substantial increase in borrowing costs across the economy. This contrasts dramatically with the apparent correlation between the base rate and mortgage costs, with the rate on a two-year fix having hit 6%.
The paltry interest offered to customers by the banks also falls well short of the interest on cash being offered by investment platforms.
Hargreaves Lansdown, AJ Bell, Interactive Investor and others are paying around 3% on instant access cash held in customer accounts. The rate varies depending on how much cash is in the account, but it is well above what the large banks currently offer in all instances.
Significantly higher interest rates are available on the platforms via products with a time-based lock-up of six months or more.
