In March, the Treasury Select Committee, a cross-party group within the UK parliament, wrote to national High Street banks to ask them what proportion of their interest rate rises is passed on to their savings customers.
A recent analysis from consumer organisation Which? has found consumers might have earned hundreds of pounds every year using saving rates deals from challenger banks rather than relying on those of High Street banks.
Looking at rates today, savers could earn £312 more over a year on a £10,000 deposit by putting their money in the market-leading instant-access account, offered by Chip, compared with Barclays’ Everyday Saver, the non-profit organisation said as an example.
Challenger banks paid an average rate of 0.57% over the period from January 2020 to March 2023, while building societies paid 0.42%. High Street banks averaged 0.16%.
Analysis of savings rates was based on data provided by Moneyfacts.
Many customers do not bother switching banks out of convenience and being keen to rely on the perceived safety of traditional lenders.
The Financial Conduct Authority (FCA) also wrote to High Street banks asking them to justify their lower savings rates, and said it may make “onerous interventions” if firms could not justify passing their interest rates.
The FCA will introduce a Consumer Duty in July, aimed at encouraging financial institutions to give customers value for money.
