Thursday 2 February 2017 11:51 am

Tesco Bank's chief exec says lenders don't pay customers enough interest on current accounts

The boss of Tesco Bank has hit out at high street rivals, claiming they make billions of pounds by skimping on the rate of interest paid to customers.

Benny Higgins, who led the lender through a mammoth cyber attack on Tesco Bank last November, said the amount of switching between providers remains "stubbornly low", something lenders use to their advantage.

“Banks in the UK generate almost £9bn from running current accounts and much of that is by not paying interest," he told the BBC's Today programme.

Read more: Ditched auditor brought back to investigate Tesco Bank hack

The news came as Tesco Bank went on a charm offensive for those customers who have kept their accounts open with the lender and in an effort to entice in new ones.

The supermarket giant's banking division already pays three per cent on current accounts for balances up to £3,000, today it committed that this rate would be guaranteed until 1 April 2019 for both current and new customers.

Higgins added:

Today’s about doing for customers what many banks don’t do. It’s giving them certainty over their future. It’s thanking them for their business.

Read more: Tesco Bank's perception goes into the red after security breach

And despite its security failings at the end of last year, which led to £2.2m being taken from 9,000 of the customer's current accounts, Higgins revealed there had not been a run on bank.

“Since the incident we’ve see the number of customers shopping with us for current accounts grow quite significantly," he said.

A number of high street banks last year rolled back on higher interest current account offerings.

Last August, Santander halved the headline interest rates of its 1-2-3 account.

In October, Lloyds Banking Group's Club Lloyds account also halved interest rates, while TSB reduced its Classic Plus rate from five per cent to three per cent.

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