British banks have been accused of “profiteering” as millions of Britons struggle to get by during the cost-of-living crisis.
As a result, the Financial Conduct Authority (FCA) has summoned the four big banks for a meeting on Thursday over their conduct.
Appearing to support such allegations, veterans minister Johnny Mercer said this morning: “Interest rates are going up and the Government wants to see those passed on to savers.
He told Sky News: “You don’t want to see any profiteering like this, particularly when life is really, really tough for people out there at the moment, around interest rates.
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He added: “It does not sound good.”
Challenged that the difference between savings and mortgage rates was as much as 4 per cent in some cases, Mr Mercer was plain. “It does sound like profiteering. The regulators will call them in and let us see what happens”, he said.
The FCA have called in bank chiefs to explain why savings rates are lagging so far behind the rising cost of mortgages. It will hear from executives from HSBC, NatWest, Lloyds and Barclays to attend on Thursday amid allegations of profiteering.
MPs on the treasury committee are undertaking a campaign to boost saving rates for lenders. They have written to the four biggest lenders demanding answers to their concerns in the light of the base interest rate reaching 5 per cent.
Dame Andrea Leadsom, a former cabinet minister, said that “it’s quite clear they have failed to pass on the rise in interest rates to savers”.
Labour’s Dame Angela Eagle added: “This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”
Work and pensions secretary Mel Stride has also acknowledged there are “questions to be asked” of the banks.
Pat McFadden, shadow chief secretary to the Treasury, was another to urge banks this morning to “do more to pass on the benefits to savers” as they are accused of profiteering.
The Labour MP stopped short of making this accusation himself, but said it is “right” that bank chiefs are called before the financial regulator on Thursday.
Mr McFadden told Sky News: “The spread between what they’re charging in mortgage rates and what they’re giving in savings rates seems to have got bigger.
“On a basic instant access account, even though mortgage rates are about 6% – the bank rate is about 4.5%. Some of the banks are paying 1% on these accounts. So I think it’s quite right that the regulator tries to do something about this.”
He said banks are “not serving their customers as well as they could”, adding that this is not “how a rise in interest rates is supposed to work”.
“They’re passing on the pain to mortgage holders – they’ve got to do more to pass on the benefits to savers”, he added.
It comes after the charter, agreed late last month between chancellor Jeremy Hunt and the big mortgage lenders, sought to help households struggling to pay soaring bills.
The chancellor had raised concerns that banks were not passing better interest rates on to savers, promising to come back to this issue at a later date.
From the end of July, a new consumer duty will be introduced to force financial firms to put consumers at the heart of what they do.
Under the charter agreed by Mr Hunt, those threatened by repossession will be granted a minimum 12 months of grace from their first missed payment.
The banks have denied profiteering.
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