Banking giants asked to explain why some savings rates remain so low
The Treasury Committee is asking major banks for a breakdown of the revenue and profits generated from their savings products.
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Your support makes all the difference.A powerful committee of MPs is pressing Britain’s biggest banks to explain why some of their savings rates are still significantly lower than the Bank of England base rate.
The Treasury Committee has written to Barclays, HSBC UK, Lloyds Banking Group and NatWest Group.
The letters point out to banks that they have recently reported increases in their net interest margin – the difference between the interest a bank pays to savers and what it receives from borrowers.
The committee wants to know whether net interest margins are linked to the amounts that bank bosses are being paid.
The letters also say that MPs’ constituents may reasonably surmise that banks have taken the opportunity of a rising Bank of England base rate and a reluctance of customers to switch to increase net margins and profits.
The letters point out that some savings accounts are still paying rates of interest below 1%, even though the base rate now stands at 4%.
The most powerful tool consumers have is to take their money elsewhere. But the banks also have a responsibility here
Banks offer a range of savings options, with some accounts now paying more than 4%.
The MPs question how Barclays, HSBC, Lloyds Banking Group (which includes Halifax and Bank of Scotland) and NatWest Group (including RBS) determine what proportion of interest rate rises to pass on to their savings customers.
The committee also pointed out that several banks have also increased the pay of their chief executives.
For example, the letter addressed to Dame Alison Rose, NatWest Group CEO, says: “We understand that you received total remuneration of £5.2 million in 2022 (up 46% from £3.6 million in 2021)”.
The committee is asking the banks whether CEO remuneration is linked to bank profits, net interest margins, and the performance of their savings and mortgage businesses.
The MPs are also asking each bank for a breakdown of the revenue and profits generated from their savings products, the value of deposits in their instant easy-access saving accounts, and how many customers have over £5,000 in these accounts.
The banks are also being asked how many branches they intend to close in the next two years.
Commenting on the correspondence, Harriett Baldwin, chair of the Treasury Committee, said: “While consumers are always advised to shop around for the best deals, it is difficult to avoid the conclusion that our biggest banks are taking advantage of their most loyal customers to increase profits and CEO pay.
“The most powerful tool consumers have is to take their money elsewhere. But the banks also have a responsibility here. They need to step up and offer our constituents reasonable savings rates.”