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UK’s biggest banks urged to increase savings rates

Britain’s biggest banks need to “up their game” and stop fobbing off millions of loyal customers with “measly” savings rates, according to the head of an influential committee of MPs.

MPs on the Commons Treasury committee have been investigating why, when the Bank of England interest rate has increased 12 times to 4.5%, many leading banks still offer accessible access savings accounts paying less than 1% and, in some cases, as little as 0.25%.

They had already accused bank bosses of seemingly “taking advantage” of loyal customers. At the same time, the Financial Conduct Authority said in April that it had challenged some banks that had been miserly with their savings rate increases.

The FCA warned that “onerous interventions” would be considered if it concluded its concerns were not being adequately addressed.

The consumer body Which? Has also sounded the alarm, saying that high street banks “have been short-changing savers by paying unjustifiably low rates for years”.

The Barclays Everyday Saver easy access account offers only 0.7% interest, Santander Everyday Saver pays 0.85%, while Lloyds Bank Easy Saver offers 0.9% unless customers have got £25,000-plus stashed away. Virgin Money’s Everyday Saver is paying just 0.25%.

At the same time, some smaller players, such as challenger banks and building societies, are offering eye-catching rates: Saffron building society recently launched an account paying a fixed 9% rate, while Skipton building society announced one with a 7.5% rate. However, some high-paying accounts have several restrictions regarding who can sign up and how much can be saved.

According to the Bank of England, about 60% of household deposits are held in instant access accounts, which said last month, the passing on of interest rate rises to savers had been “unusually weak”.

Harriett Baldwin MP, the chair of the Treasury committee, said that in the wake of the Bank of England’s comments, it was “clearer than ever that the nation’s biggest banks need to up their game and encourage saving”.

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