The City watchdog put more pressure on the financial sector yesterday with new rules that could see banks and building societies named and shamed for paying poor interest rates to longstanding customers.
The Financial Conduct Authority (FCA) said that from next year, firms will have to provide clear information on how much interest savers are paid on their accounts and make this more easily accessible to help them compare accounts.
Under the proposals, intended to come into force next year, consumers will also be alerted by text message to changes in interest rates, the expiry of a bonus rate or maturity of a fixed-term account.
The plans come after a study by the FCA into the £700bn UK savings market revealed that many savers were getting a raw deal.
Christopher Woolard, director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal. Our package of measures are all about giving consumers the information they need to make an informed decision about what to do with their savings, and the ability to act on it quickly.”
Despite the impending departure of Martin Wheatley, an unpopular figure with many leaders in the City, the move shows the FCA is still keeping a watchful eye on the banking sector.
Lloyds and RBS, the banks most well-known for being bailed out by the UK government during the financial crisis, are still feeling the lingering effects from that era.
On Wednesday, a judge at London’s High Court of Justice ruled that Lloyds must release details of legal advice it received relating to its disastrous takeover of Halifax Bank of Scotland (HBOS) in 2008.
Around 6,000 investors claim Lloyds failed adequately to inform them of the risks involved in the HBOS takeover and are now seeking £350m in damages.
The claimants say that Lloyds did not tell them it was being kept afloat by the Bank of England and the US Federal Reserve to the tune of £25.65bn and $18bn (£12bn), as well as a further £10bn loan.
Lloyds said it does not consider there to be any legal basis to the claims and intends to “robustly contest” the legal action.
Meanwhile, RBS has hired external advisers to launch an external investigation into the treatment of small business customers to run alongside a separate probe by the FCA.
The bank is being investigated by the FCA over allegations it pushed small firms into its Global Restructuring Group turnaround unit so it could charge higher fees and interest and then take control of their assets.
Chancellor George Osborne has made no secret of his desire to offload the government’s stakes in Lloyds and RBS, despite the Treasury being expected to lose money on the latter. But while his plans may be pleasing to investors who prefer to see the banks in private hands, this week’s issues for both companies show that they are still vulnerable to unwelcome hangovers from the events of recent years.