Big banks in Britain eyed by watchdog over low saving rates

Virgin Money UK

18/09/2024 12:50

LONDON, Sept 18 (Reuters) - The largest banks in Britain
are paying below-average interest rates for some savings
accounts and face regulatory action if they fail to offer better
value, the Financial Conduct Authority (FCA) warned on
Wednesday.
    The FCA, which last year launched a review of the cash
savings market, said it had worked with Lloyds  LLOY.L , HSBC
 HSBA.L , NatWest  NWG.L , Santander UK  SAN.MC , Barclays
 BARC.L , Nationwide Building Society  NBS.L , TSB, Virgin Money
UK  VMUK.L  and the Cooperative Bank.
    Under the FCA's Consumer Duty, which came into force last
July and is one of the regulator's top priorities, banks, asset
managers and other regulated financial services companies have
to ensure customers receive fair value and that no group is
receiving a worse deal than others on the same product.
    Savers will receive a total of around 4 billion pounds ($5.3
billion) per year in extra interest payments after average rates
on easy access savings accounts rose to 2.11% in June from 1.66%
last July. Almost 175 instant access accounts offered rates
above 4%, the FCA said. 
    But the largest firms can still pay below the market average
for standard easy access products and the watchdog queried how
some firms assessed the value of their products.
    "We expect firms will improve fair value assessments over
time and we will take appropriate action where we consider this
is not the case," the FCA said.
    Regulatory action can range from working with firms to
improve customer value to penalties.
    The Bank of England cut bank rates to 5% from a 16-year high
of 5.25% in August and economists expect further easing this
year, amid hopes that Britain's battle with weak growth and high
inflation might be coming to an end.
($1 = 0.7560 pounds)

 (Reporting by Kirstin Ridley; editing by David Evans)
 ((kirstin.ridley@thomsonreuters.com; +44 (0) 207 513 5666;))