BANKS will this week come under fresh political pressure to give customers greater notice of hikes in interest rates.
Labour will tomorrow table an amendment to the Financial Services Bill after customers of Halifax were given a minimum of only 14 days’ notice of an increase in the standard variable rate, despite the record low Bank of England base rate.
Halifax, Britain’s largest mortgage lender and part of taxpayer-backed Lloyds Banking Group, is one of several banks to raise rates at short notice.
These typically add at least £200 to mortgage bills, depending on the size of the loan, shadow business secretary and Streatham MP Chuka Umunna told City A.M.
“It is not acceptable for banks to give, in some cases, just 14 days notice of substantial rate hikes and expect consumers – who are already facing rising living costs – to simply put up with it.”
Labour has not called for a specific timescale for informing customers of rises and yesterday Umunna said it “would be for the Treasury to work with the industry to decide how much of a notice period”.
Britain’s leading banks have said that recent rises in the cost of borrowing money on the wholesale markets have left them with little choice but to pass on costs to customers, despite the BoE’s base rate being kept at a record low of 0.5 per cent since March 2009.