Bank bosses admitted to the regulator that they needed to “do more” to help customers access the best deals on savings products.
In a statement after yesterday’s meeting, the regulator said “those in the room recognised that they needed to do more to help their consumers access the best rates.”
Savings rates have lagged the Bank of England’s base rate significantly over the past 18 months. According to data from Moneyfacts, the average easy-access savings account pays just 2.36 per cent although many of the rates on offer at high street banks are significantly below this.
Lenders were “challenged” by the FCA where their decision making has been “slow”. The regulator said it had started to see some positive action, but now wanted to see that progress “accelerate”.
“We discussed how our consumer duty will set a new standard for firms from the end of July, including on savings rates. We set out that expectation to bank and building society leaders in today’s meeting,” the FCA said.
Ahead of the meeting yesterday, a number of banks raised the rates on offer with HSBC, Nationwide and Yorkshire Building Society among the lenders improving deals.
The FCA is conducting an investigation into the savings market and will lay out its findings at the end of the month, including whether any remedial action should be taken.
David Postings, chief executive of UK Finance, said: ““The savings market is competitive, with a wide range of different accounts available to help people with their individual saving needs. We always encourage customers to shop around for the type of account that best suits them.”
Banks had been under increasing pressure from legislators for offering low rates on easy access savings accounts.
MPs on the Treasury Committee have accused banks of “blatant profiteering” and asked the regulator what efforts it would take to clamp down on.
The banks have repeatedly argued that there are a range of savings products available for consumers, many of which offer higher rates.
According to Bank of England data, £250bn is sitting in banks which are paying no interest. That is five times more than in 2008, when interest rates were last at an equivalent level. Another £945m remains in easy access accounts which pay around 1.3 per cent.
Laith Khalaf, head of investment analysis at AJ Bell, commented: “Savers shouldn’t wait for the banks to start paying decent rates on their accounts though. By voting with their feet, savers can obtain significantly better rates and put some much needed competitive pressure on banks to boot.”